##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
  FORM 10-K
 Ö
 Commission File Number 1-5823
 CNA FINANCIAL CORPORATION
  Delaware
    
    36-6169860(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)333 S. WabashChicago, Illinois
    
    60604(Address of principal executive offices)
    
    (Zip Code)
 (312) 822-5000
 (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock 
with a par value 
of $2.50 per share
    
    New York Stock Exchange
Chicago Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 Ö
 Ö
 Ö
  Ö
  Ö
 Ö
  DOCUMENTS INCORPORATED BY REFERENCE:




---



##### 



Item
    
    
    
    PageNumber
    
    
    
    NumberPART I1.
    
    Business
    
    31A.
    
    Risk Factors
    
    91B.
    
    Unresolved Staff Comments
    
    142.
    
    Properties
    
    143.
    
    Legal Proceedings
    
    14PART II5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    156.
    
    Selected Financial Data
    
    167.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    177A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    518.
    
    Financial Statements and Supplementary Data
    
    569.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    1389A.
    
    Controls and Procedures
    
    1389B.
    
    Other Information
    
    138PART III10.
    
    Directors, Executive Officers and Corporate Governance
    
    13911.
    
    Executive Compensation
    
    14012.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    14013.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    14014.
    
    Principal Accounting Fees and Services
    
    140PART IV15.
    
    Exhibits, Financial Statement Schedules
    
    141
  
 
 2




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
    Competition
    Regulation
    3




---



##### Table of Contents



Employee Relations
   4




---



##### Table of Contents



Direct Written Premiums by Geographic Concentration
  Direct Written Premiums
 Percent of TotalYears ended December 31
    
    2010
    
    2009
    
    2008California
    
    
    9.3
    %
    
    
    9.1
    %
    
    
    9.2
    %New York
    
    
    6.8
    
    
    
    6.8
    
    
    
    6.9Texas
    
    
    6.5
    
    
    
    6.6
    
    
    
    6.2Florida
    
    
    6.1
    
    
    
    6.2
    
    
    
    6.5Illinois
    
    
    4.0
    
    
    
    3.8
    
    
    
    3.8Missouri
    
    
    4.0
    
    
    
    3.6
    
    
    
    3.1New Jersey
    
    
    3.5
    
    
    
    3.7
    
    
    
    3.8Pennsylvania
    
    
    3.4
    
    
    
    3.2
    
    
    
    3.3All other states, countries or political subdivisions (a)
    
    
    56.4
    
    
    
    57.0
    
    
    
    57.2Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 (a)
    
    No other individual state, country or political subdivision accounts for more than 3.0% of
direct written premiums.  5




---



##### Table of Contents



Property and Casualty Claim and Claim Adjustment Expenses
   6




---



##### Table of Contents



Schedule of Loss Reserve Development
 Calendar Year Ended
    
    2000
    
    2001 (a)
    
    2002 (b)
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010 (c)(In millions)Originally reported gross reserves for unpaid
claim and claim adjustment expenses
    
    $
    26,510
    
    
    $
    29,649
    
    
    $
    25,719
    
    
    $
    31,284
    
    
    $
    31,204
    
    
    $
    30,694
    
    
    $
    29,459
    
    
    $
    28,415
    
    
    $
    27,475
    
    
    $
    26,712
    
    
    $
    25,412Originally reported ceded recoverable
    
    
    7,333
    
    
    
    11,703
    
    
    
    10,490
    
    
    
    13,847
    
    
    
    13,682
    
    
    
    10,438
    
    
    
    8,078
    
    
    
    6,945
    
    
    
    6,213
    
    
    
    5,524
    
    
    
    6,060Originally reported net reserves for unpaid
claim and claim adjustment expenses
    
    $
    19,177
    
    
    $
    17,946
    
    
    $
    15,229
    
    
    $
    17,437
    
    
    $
    17,522
    
    
    $
    20,256
    
    
    $
    21,381
    
    
    $
    21,470
    
    
    $
    21,262
    
    
    $
    21,188
    
    
    $
    19,352Cumulative net paid as of:One year later
    
    $
    7,686
    
    
    $
    5,981
    
    
    $
    5,373
    
    
    $
    4,382
    
    
    $
    2,651
    
    
    $
    3,442
    
    
    $
    4,436
    
    
    $
    4,308
    
    
    $
    3,930
    
    
    $
    3,762
    
    
    $
    -Two years later
    
    
    11,992
    
    
    
    10,355
    
    
    
    8,768
    
    
    
    6,104
    
    
    
    4,963
    
    
    
    7,022
    
    
    
    7,676
    
    
    
    7,127
    
    
    
    6,746
    
    
    
    -
    
    
    
    -Three years later
    
    
    15,291
    
    
    
    12,954
    
    
    
    9,747
    
    
    
    7,780
    
    
    
    7,825
    
    
    
    9,620
    
    
    
    9,822
    
    
    
    9,102
    
    
    
    -
    
    
    
    -
    
    
    
    -Four years later
    
    
    17,333
    
    
    
    13,244
    
    
    
    10,870
    
    
    
    10,085
    
    
    
    9,914
    
    
    
    11,289
    
    
    
    11,312
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Five years later
    
    
    17,775
    
    
    
    13,922
    
    
    
    12,814
    
    
    
    11,834
    
    
    
    11,261
    
    
    
    12,465
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Six years later
    
    
    18,970
    
    
    
    15,493
    
    
    
    14,320
    
    
    
    12,988
    
    
    
    12,226
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Seven years later
    
    
    20,297
    
    
    
    16,769
    
    
    
    15,291
    
    
    
    13,845
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Eight years later
    
    
    21,382
    
    
    
    17,668
    
    
    
    16,022
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Nine years later
    
    
    22,187
    
    
    
    18,286
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Ten years later
    
    
    22,826
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net reserves re-estimated as of:End of initial year
    
    $
    19,177
    
    
    $
    17,946
    
    
    $
    15,229
    
    
    $
    17,437
    
    
    $
    17,522
    
    
    $
    20,256
    
    
    $
    21,381
    
    
    $
    21,470
    
    
    $
    21,262
    
    
    $
    21,188
    
    
    $
    19,352One year later
    
    
    21,502
    
    
    
    17,980
    
    
    
    17,650
    
    
    
    17,671
    
    
    
    18,513
    
    
    
    20,588
    
    
    
    21,601
    
    
    
    21,463
    
    
    
    21,021
    
    
    
    20,643
    
    
    
    -Two years later
    
    
    21,555
    
    
    
    20,533
    
    
    
    18,248
    
    
    
    19,120
    
    
    
    19,044
    
    
    
    20,975
    
    
    
    21,706
    
    
    
    21,259
    
    
    
    20,472
    
    
    
    -
    
    
    
    -Three years later
    
    
    24,058
    
    
    
    21,109
    
    
    
    19,814
    
    
    
    19,760
    
    
    
    19,631
    
    
    
    21,408
    
    
    
    21,609
    
    
    
    20,752
    
    
    
    -
    
    
    
    -
    
    
    
    -Four years later
    
    
    24,587
    
    
    
    22,547
    
    
    
    20,384
    
    
    
    20,425
    
    
    
    20,212
    
    
    
    21,432
    
    
    
    21,286
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Five years later
    
    
    25,594
    
    
    
    22,983
    
    
    
    21,076
    
    
    
    21,060
    
    
    
    20,301
    
    
    
    21,326
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Six years later
    
    
    26,023
    
    
    
    23,603
    
    
    
    21,769
    
    
    
    21,217
    
    
    
    20,339
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Seven years later
    
    
    26,585
    
    
    
    24,267
    
    
    
    21,974
    
    
    
    21,381
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Eight years later
    
    
    27,207
    
    
    
    24,548
    
    
    
    22,168
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Nine years later
    
    
    27,510
    
    
    
    24,765
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Ten years later
    
    
    27,702
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total net (deficiency) redundancy
    
    $
    (8,525
    )
    
    $
    (6,819
    )
    
    $
    (6,939
    )
    
    $
    (3,944
    )
    
    $
    (2,817
    )
    
    $
    (1,070
    )
    
    $
    95
    
    
    $
    718
    
    
    $
    790
    
    
    $
    545
    
    
    $
    -Reconciliation to gross re-estimated reserves:Net reserves re-estimated
    
    $
    27,702
    
    
    $
    24,765
    
    
    $
    22,168
    
    
    $
    21,381
    
    
    $
    20,339
    
    
    $
    21,326
    
    
    $
    21,286
    
    
    $
    20,752
    
    
    $
    20,472
    
    
    $
    20,643
    
    
    $
    -Re-estimated ceded recoverable
    
    
    11,397
    
    
    
    16,911
    
    
    
    16,279
    
    
    
    14,639
    
    
    
    13,507
    
    
    
    10,846
    
    
    
    8,541
    
    
    
    7,180
    
    
    
    6,168
    
    
    
    5,559
    
    
    
    -Total gross re-estimated reserves
    
    $
    39,099
    
    
    $
    41,676
    
    
    $
    38,447
    
    
    $
    36,020
    
    
    $
    33,846
    
    
    $
    32,172
    
    
    $
    29,827
    
    
    $
    27,932
    
    
    $
    26,640
    
    
    $
    26,202
    
    
    $
    -Total gross (deficiency) redundancy
    
    $
    (12,589
    )
    
    $
    (12,027
    )
    
    $
    (12,728
    )
    
    $
    (4,736
    )
    
    $
    (2,642
    )
    
    $
    (1,478
    )
    
    $
    (368
    )
    
    $
    483
    
    
    $
    835
    
    
    $
    510
    
    
    $
    -Net (deficiency) redundancy related to:Asbestos
    
    $
    (1,590
    )
    
    $
    (818
    )
    
    $
    (827
    )
    
    $
    (177
    )
    
    $
    (123
    )
    
    $
    (113
    )
    
    $
    (112
    )
    
    $
    (107
    )
    
    $
    (79
    )
    
    $
    -
    
    
    $
    -Environmental pollution
    
    
    (635
    )
    
    
    (288
    )
    
    
    (282
    )
    
    
    (209
    )
    
    
    (209
    )
    
    
    (159
    )
    
    
    (159
    )
    
    
    (159
    )
    
    
    (76
    )
    
    
    -
    
    
    
    -Total asbestos and environmental pollution
    
    
    (2,225
    )
    
    
    (1,106
    )
    
    
    (1,109
    )
    
    
    (386
    )
    
    
    (332
    )
    
    
    (272
    )
    
    
    (271
    )
    
    
    (266
    )
    
    
    (155
    )
    
    
    -
    
    
    
    -Core (Non-asbestos &
environmental pollution)
    
    
    (6,300
    )
    
    
    (5,713
    )
    
    
    (5,830
    )
    
    
    (3,558
    )
    
    
    (2,485
    )
    
    
    (798
    )
    
    
    366
    
    
    
    984
    
    
    
    945
    
    
    
    545
    
    
    
    -Total net (deficiency) redundancy
    
    $
    (8,525
    )
    
    $
    (6,819
    )
    
    $
    (6,939
    )
    
    $
    (3,944
    )
    
    $
    (2,817
    )
    
    $
    (1,070
    )
    
    $
    95
    
    
    $
    718
    
    
    $
    790
    
    
    $
    545
    
    
    $
    -
 7




---



##### Table of Contents



(a)
    
    Effective January 1, 2001, we established a new life insurance company, CNA Group Life
Assurance Company (CNAGLA). Further, on January 1, 2001 $1.1 billion of reserves were
transferred from CCC to CNAGLA.(b)
    
    Effective October 31, 2002, we sold CNA Reinsurance Company Limited. As a result of the
sale, net reserves were reduced by $1.3 billion.(c)
    
    Effective January 1, 2010, we ceded approximately $1.5 billion of net asbestos and
environmental pollution (A&EP) claim and allocated claim adjustment expense reserves relating
to our continuing operations under a retroactive reinsurance agreement with an aggregate limit
of $4 billion, as further discussed in Note F to the Consolidated Financial Statements
included under Item 8.
  Available Information
 www.sec.gov
  8




---



##### Table of Contents



ITEM 1A. RISK FACTORS
  If we determine that our recorded loss reserves are insufficient to cover our estimated ultimate
unpaid liability for claims, we may need to increase our loss reserves.
   
    
    the effects of recessionary economic conditions, which have resulted in an increase in the
number and size of claims due to corporate failures; these claims include both directors and
officers (D&O) and errors and omissions (E&O) insurance claims;
    
    class action litigation relating to claims handling and other practices; and
    
    mass tort claims, including bodily injury claims related to welding rods, benzene, lead,
noise induced hearing loss, injuries from various medical products including pharmaceuticals,
and various other chemical and radiation exposure claims.
  9




---



##### Table of Contents



We have exposures related to asbestos and environmental pollution (A&EP) claims, which could result
in additional losses.
   Catastrophe losses are unpredictable.
   Our premium writings and profitability are affected by the availability and cost of reinsurance.
  We may not be able to collect amounts owed to us by reinsurers.
  10




---



##### Table of Contents



Our key assumptions used to determine reserves and deferred acquisition costs for our long term
care product offerings could vary significantly from actual experience.
  We have incurred and may continue to incur significant realized and unrealized investment losses
and volatility in net investment income arising from volatility in the capital and credit markets.
  Our valuation of investments and impairment of securities requires significant judgment.
   We face intense competition in our industry and may be adversely affected by the cyclical nature of
the property and casualty business.
  We are subject to capital adequacy requirements and, if we are unable to maintain or raise
sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit us from
operating our business.
  11




---



##### Table of Contents



Our insurance subsidiaries, upon whom we depend for dividends in order to fund our working capital
needs, are limited by state regulators in their ability to pay dividends.
  Rating agencies may downgrade their ratings of us and thereby adversely affect our ability to write
insurance at competitive rates or at all.
    We are subject to extensive federal, state and local governmental regulations that restrict our
ability to do business and generate revenues.
  12




---



##### Table of Contents




    
    standards of solvency including risk-based capital measurements;
    
    restrictions on the nature, quality and concentration of investments;
    
    restrictions on our ability to withdraw from unprofitable lines of insurance or
unprofitable market areas;
    
    the required use of certain methods of accounting and reporting;
    
    the establishment of reserves for unearned premiums, losses and other purposes;
    
    potential assessments for funds necessary to settle covered claims against impaired,
insolvent or failed private or quasi-governmental insurers;
    
    licensing of insurers and agents;
    
    approval of policy forms;
    
    limitations on the ability of our insurance subsidiaries to pay dividends to us; and
    
    limitations on the ability to non-renew, cancel or change terms and conditions in policies.
  13




---



##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  Amount (Square Feet) of BuildingOwned and Occupied or LeasedLocation
    
    and Occupied by CNA
    
    Principal Usage333 S. Wabash Avenue, Chicago, Illinois
    
    
    763,322
    
    
    Principal executive offices of CNAF401 Penn Street, Reading, Pennsylvania
    
    
    190,677
    
    
    Property and casualty insurance
offices2405 Lucien Way, Maitland, Florida
    
    
    116,948
    
    
    Property and casualty insurance
offices40 Wall Street, New York, New York
    
    
    114,096
    
    
    Property and casualty insurance
offices1100 Ward Avenue, Honolulu, Hawaii
    
    
    104,478
    
    
    Property and casualty insurance
offices101 S. Phillips Avenue, Sioux Falls, South Dakota
    
    
    83,616
    
    
    Property and casualty insurance
offices600 N. Pearl Street, Dallas, Texas
    
    
    65,752
    
    
    Property and casualty insurance
offices1249 S. River Road, Cranbury, New Jersey
    
    
    50,366
    
    
    Property and casualty insurance
offices4267 Meridian Parkway, Aurora, Illinois
    
    
    46,903
    
    
    Data center675 Placentia Avenue, Brea, California
    
    
    46,571
    
    
    Property and casualty insurance
offices
  
 ITEM 3. LEGAL PROCEEDINGS
   14




---



##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
     Common Stock Information
 2010
    
    2009Dividends
    
    
    
    
    
    
    
    
    
    DividendsHigh
    
    Low
    
    Declared
    
    High
    
    Low
    
    DeclaredQuarter:First
    
    $
    27.29
    
    
    $
    21.71
    
    
    $
    -
    
    
    $
    17.43
    
    
    $
    6.41
    
    
    $
    -Second
    
    
    29.53
    
    
    
    23.24
    
    
    
    -
    
    
    
    17.59
    
    
    
    8.83
    
    
    
    -Third
    
    
    29.50
    
    
    
    24.82
    
    
    
    -
    
    
    
    26.51
    
    
    
    13.63
    
    
    
    -Fourth
    
    
    28.79
    
    
    
    25.43
    
    
    
    -
    
    
    
    25.01
    
    
    
    20.48
    
    
    
    -
  Stock Price Performance Graph
 Company / Index
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010CNA Financial Corporation
    
    
    100.00
    
    
    
    123.19
    
    
    
    103.91
    
    
    
    51.47
    
    
    
    75.14
    
    
    
    84.69S&P 500 Index
    
    
    100.00
    
    
    
    115.79
    
    
    
    122.16
    
    
    
    76.96
    
    
    
    97.33
    
    
    
    111.99S&P 500 Property & Casualty Insurance Index
    
    
    100.00
    
    
    
    112.87
    
    
    
    97.11
    
    
    
    68.55
    
    
    
    77.01
    
    
    
    83.90
 
 15




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Selected Financial Data
 As of and for the Years EndedDecember 31
    
    2010
    
    2009
    
    2008
    
    2007
    
    2006(In millions, except per share data)Results of Operations:Revenues
    
    $
    9,209
    
    
    $
    8,472
    
    
    $
    7,799
    
    
    $
    9,885
    
    
    $
    10,376Income (loss) from continuing
operations, net of tax
    
    $
    779
    
    
    $
    483
    
    
    $
    (251
    )
    
    $
    905
    
    
    $
    1,181Income (loss) from discontinued
operations, net of tax
    
    
    (21
    )
    
    
    (2
    )
    
    
    9
    
    
    
    (6
    )
    
    
    (29
    )Net (income) loss attributable to
noncontrolling interests, net of tax
    
    
    (68
    )
    
    
    (62
    )
    
    
    (57
    )
    
    
    (48
    )
    
    
    (44
    )Net income (loss) attributable to CNA
    
    $
    690
    
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851
    
    
    $
    1,108Basic Earnings (Loss) Per Share
Attributable to CNA Common
Stockholders:Income (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    2.36
    
    
    $
    1.11
    
    
    $
    (1.21
    )
    
    $
    3.15
    
    
    $
    4.17Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.08
    )
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    
    (0.11
    )Basic earnings (loss) per share
attributable to CNA common
stockholders
    
    $
    2.28
    
    
    $
    1.10
    
    
    $
    (1.18
    )
    
    $
    3.13
    
    
    $
    4.06Diluted Earnings (Loss) Per Share
Attributable to CNA Common
Stockholders:Income (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    2.36
    
    
    $
    1.11
    
    
    $
    (1.21
    )
    
    $
    3.15
    
    
    $
    4.16Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.08
    )
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    
    (0.11
    )Diluted earnings (loss) per share
attributable to CNA common
stockholders
    
    $
    2.28
    
    
    $
    1.10
    
    
    $
    (1.18
    )
    
    $
    3.13
    
    
    $
    4.05Dividends declared per common share
    
    $
    -
    
    
    $
    -
    
    
    $
    0.45
    
    
    $
    0.35
    
    
    $
    -Financial Condition:Total investments
    
    $
    42,655
    
    
    $
    41,996
    
    
    $
    35,003
    
    
    $
    41,789
    
    
    $
    44,096Total assets
    
    
    55,331
    
    
    
    55,298
    
    
    
    51,688
    
    
    
    56,759
    
    
    
    60,283Insurance reserves
    
    
    37,590
    
    
    
    38,263
    
    
    
    38,771
    
    
    
    40,222
    
    
    
    41,080Long and short term debt
    
    
    2,651
    
    
    
    2,303
    
    
    
    2,058
    
    
    
    2,157
    
    
    
    2,156Total CNA stockholders equity
    
    
    10,954
    
    
    
    10,660
    
    
    
    6,877
    
    
    
    10,150
    
    
    
    9,768Book value per common share
    
    $
    40.70
    
    
    $
    35.91
    
    
    $
    20.92
    
    
    $
    37.36
    
    
    $
    36.03Statutory Surplus:Combined Continental Casualty
Companies (a)
    
    $
    9,821
    (b)
    
    $
    9,338
    
    
    $
    7,819
    
    
    $
    8,348
    
    
    $
    8,056Life company
    
    
    498
    (b)
    
    
    448
    
    
    
    487
    
    
    
    471
    
    
    
    687
 (a)
    
    Represents the combined statutory surplus of CCC and its subsidiaries, including the Life
company, as determined in accordance with statutory accounting practices as further discussed
in Note L to the Consolidated Financial Statements included under Item 8.(b)
    
    Preliminary results.
 16




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Overview
  Agreement to Cede Asbestos and Environmental Pollution (A&EP) Liabilities to National Indemnity
Company (NICO)
   
    
    improves our earnings outlook and financial stability by significantly mitigating A&EP
reserve risk going forward;
    
    effectively eliminates credit risk on $1.2 billion of third party A&EP reinsurance
recoverables effective January 1, 2010; and
    
    eliminates an area of uncertainty from the perspective of rating agencies.
 17




---



##### Table of Contents



Index to this MD&A
  Page No.Consolidated Operations
    
    
    19Critical Accounting Estimates
    
    
    22Reserves  Estimates and Uncertainties
    
    
    24Segment Results
    
    
    29CNA Specialty
    
    
    30CNA Commercial
    
    
    33Life & Group Non-Core
    
    
    36Corporate & Other Non-Core
    
    
    38Investments
    
    
    39Net Investment Income
    
    
    39Net Realized Investment Gains (Losses)
    
    
    40Duration
    
    
    42Asset-Backed Exposure
    
    
    43Short Term Investments
    
    
    43Separate Accounts
    
    
    44Liquidity and Capital Resources
    
    
    45Cash Flows
    
    
    452008 Senior Preferred
    
    
    45Liquidity
    
    
    46Dividends
    
    
    46CNA Surety
    
    
    46Commitments, Contingencies and Guarantees
    
    
    47Ratings
    
    
    48Accounting Standards Updates
    
    
    48Forward-Looking Statements
    
    
    49
 18




---



##### Table of Contents



CONSOLIDATED OPERATIONS
 Results of Operations
  Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)RevenuesNet earned premiums
    
    $
    6,515
    
    
    $
    6,721
    
    
    $
    7,151Net investment income
    
    
    2,316
    
    
    
    2,320
    
    
    
    1,619Other revenues
    
    
    292
    
    
    
    288
    
    
    
    326Total operating revenues
    
    
    9,123
    
    
    
    9,329
    
    
    
    9,096Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    4,955
    
    
    
    5,267
    
    
    
    5,703Policyholders dividends
    
    
    30
    
    
    
    23
    
    
    
    20Amortization of deferred acquisition costs
    
    
    1,387
    
    
    
    1,417
    
    
    
    1,467Other insurance related expenses
    
    
    797
    
    
    
    781
    
    
    
    694Other expenses
    
    
    928
    
    
    
    444
    
    
    
    477Total claims, benefits and expenses
    
    
    8,097
    
    
    
    7,932
    
    
    
    8,361Operating income from continuing operations before income tax
    
    
    1,026
    
    
    
    1,397
    
    
    
    735Income tax expense on operating income
    
    
    (297
    )
    
    
    (353
    )
    
    
    (145
    )Net operating (income) loss, after-tax, attributable to noncontrolling interests
    
    
    (69
    )
    
    
    (62
    )
    
    
    (57
    )Net operating income from continuing operations attributable to CNA
    
    
    660
    
    
    
    982
    
    
    
    533Net realized investment gains (losses), net of participating policyholders interests
    
    
    86
    
    
    
    (857
    )
    
    
    (1,297
    )Income tax (expense) benefit on net realized investment gains (losses)
    
    
    (36
    )
    
    
    296
    
    
    
    456Net realized investment (gains) losses, after-tax, attributable to noncontrolling
interests
    
    
    1
    
    
    
    -
    
    
    
    -Net realized investment gains (losses) attributable to CNA
    
    
    51
    
    
    
    (561
    )
    
    
    (841
    )Income (loss) from continuing operations attributable to CNA
    
    
    711
    
    
    
    421
    
    
    
    (308
    )Income (loss) from discontinued operations attributable to CNA, 
net of income tax
(expense) benefit of $0, $0 and $9
    
    
    (21
    )
    
    
    (2
    )
    
    
    9Net income (loss) attributable to CNA
    
    $
    690
    
    
    $
    419
    
    
    $
    (299
    )
 2010 Compared with 2009
    19




---



##### Table of Contents



2009 Compared with 2008
        20




---



##### Table of Contents



21




---



##### Table of Contents



Critical Accounting Estimates
    Insurance Reserves
  Reinsurance and Insurance Receivables
    Valuation of Investments and Impairment of Securities
   22




---



##### Table of Contents



Long Term Care Products and Payout Annuity Contracts
  Pension and Postretirement Benefit Obligations
    Income Taxes
  23




---



##### Table of Contents



Reserves  Estimates and Uncertainties
    
    
    the effects of recessionary economic conditions, which have resulted in an increase in
the number and size of claims due to corporate failures; these claims include both
directors and officers (D&O) and errors and omissions (E&O) insurance claims;
    
    class action litigation relating to claims handling and other practices; and
    
    mass tort claims, including bodily injury claims related to welding rods, benzene,
lead, noise induced hearing loss, injuries from various medical products including
pharmaceuticals, and various other chemical and radiation exposure claims.
    24




---



##### Table of Contents



Establishing Reserve Estimates
     
    
    paid development;
    
    incurred development;
    
    loss ratio;
    
    Bornhuetter-Ferguson using paid loss;
    
    Bornhuetter-Ferguson using incurred loss;
    
    frequency times severity; and
    
    stochastic modeling.
   25




---



##### Table of Contents



26




---



##### Table of Contents



Periodic Reserve Reviews
       27




---



##### Table of Contents



28




---



##### Table of Contents



Segment Results
        29




---



##### Table of Contents



CNA SPECIALTY
 Business Overview
   Professional & Management Liability
 International
 Surety
 Warranty and Alternative Risks
 30




---



##### Table of Contents



Results of Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions, except ratios)Net written premiums
    
    $
    2,691
    
    
    $
    2,684
    
    
    $
    2,719Net earned premiums
    
    
    2,679
    
    
    
    2,697
    
    
    
    2,755Net investment income
    
    
    591
    
    
    
    526
    
    
    
    354Net operating income
    
    
    625
    
    
    
    591
    
    
    
    414Net realized investment gains (losses), after-tax
    
    
    20
    
    
    
    (123
    )
    
    
    (167
    )Net income
    
    
    645
    
    
    
    468
    
    
    
    247RatiosLoss and loss adjustment expense
    
    
    54.0
    %
    
    
    56.9
    %
    
    
    61.7
    %Expense
    
    
    30.5
    
    
    
    29.3
    
    
    
    27.3Dividend
    
    
    0.5
    
    
    
    0.3
    
    
    
    0.5Combined
    
    
    85.0
    %
    
    
    86.5
    %
    
    
    89.5
    %
 2010 Compared with 2009
       31




---



##### Table of Contents



Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2010
    
    2009(In millions)Gross Case Reserves
    
    $
    2,341
    
    
    $
    2,208Gross IBNR Reserves
    
    
    4,452
    
    
    
    4,714Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    6,793
    
    
    $
    6,922Net Case Reserves
    
    $
    1,992
    
    
    $
    1,781Net IBNR Reserves
    
    
    3,926
    
    
    
    4,085Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    5,918
    
    
    $
    5,866
 2009 Compared with 2008
       32




---



##### Table of Contents



CNA COMMERCIAL
 Business Overview
  Business, Commercial International
 CNA Select Risk (Select Risk)
  Results of Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions, except ratios)Net written premiums
    
    $
    3,208
    
    
    $
    3,448
    
    
    $
    3,770Net earned premiums
    
    
    3,256
    
    
    
    3,432
    
    
    
    3,787Net investment income
    
    
    873
    
    
    
    935
    
    
    
    612Net operating income
    
    
    509
    
    
    
    494
    
    
    
    292Net realized investment losses, after-tax
    
    
    (15
    )
    
    
    (236
    )
    
    
    (341
    )Net income (loss)
    
    
    494
    
    
    
    258
    
    
    
    (49
    )RatiosLoss and loss adjustment expense
    
    
    66.8
    %
    
    
    70.5
    %
    
    
    73.1
    %Expense
    
    
    35.7
    
    
    
    35.2
    
    
    
    31.2Dividend
    
    
    0.4
    
    
    
    0.3
    
    
    
    -Combined
    
    
    102.9
    %
    
    
    106.0
    %
    
    
    104.3
    %
 2010 Compared with 2009
   33




---



##### Table of Contents



Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2010
    
    2009(In millions)Gross Case Reserves
    
    $
    6,390
    
    
    $
    6,555Gross IBNR Reserves
    
    
    6,132
    
    
    
    6,688Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    12,522
    
    
    $
    13,243Net Case Reserves
    
    $
    5,349
    
    
    $
    5,306Net IBNR Reserves
    
    
    5,292
    
    
    
    5,691Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    10,641
    
    
    $
    10,997
 2009 Compared with 2008
     34




---



##### Table of Contents



35




---



##### Table of Contents



LIFE & GROUP NON-CORE
 Business Overview
   Results of Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Net earned premiums
    
    $
    582
    
    
    $
    595
    
    
    $
    612Net investment income
    
    
    715
    
    
    
    664
    
    
    
    484Net operating loss
    
    
    (87
    )
    
    
    (16
    )
    
    
    (108
    )Net realized investment gains (losses), after-tax
    
    
    33
    
    
    
    (153
    )
    
    
    (236
    )Net loss
    
    
    (54
    )
    
    
    (169
    )
    
    
    (344
    )
 2010 Compared with 2009
      2009 Compared with 2008
    36




---



##### Table of Contents



37




---



##### Table of Contents



CORPORATE & OTHER NON-CORE
 Overview
   Results of Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Net investment income
    
    $
    137
    
    
    $
    195
    
    
    $
    169Net operating loss
    
    
    (387
    )
    
    
    (87
    )
    
    
    (65
    )Net realized investment gains (losses), after-tax
    
    
    13
    
    
    
    (49
    )
    
    
    (97
    )Net loss
    
    
    (374
    )
    
    
    (136
    )
    
    
    (162
    )
 2010 Compared with 2009
    Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2010
    
    2009(In millions)Gross Case Reserves
    
    $
    1,430
    
    
    $
    1,503Gross IBNR Reserves
    
    
    2,012
    
    
    
    2,265Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    3,442
    
    
    $
    3,768Net Case Reserves
    
    $
    461
    
    
    $
    935Net IBNR Reserves
    
    
    257
    
    
    
    1,404Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    718
    
    
    $
    2,339
 2009 Compared with 2008
   38




---



##### Table of Contents



INVESTMENTS
 Net Investment Income
  Net Investment Income
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Fixed maturity securities
    
    $
    2,051
    
    
    $
    1,941
    
    
    $
    1,984Short term investments
    
    
    15
    
    
    
    36
    
    
    
    115Limited partnerships
    
    
    249
    
    
    
    315
    
    
    
    (379
    )Equity securities
    
    
    32
    
    
    
    49
    
    
    
    80Mortgage loans
    
    
    2
    
    
    
    -
    
    
    
    -Trading portfolio  indexed group annuity
    
    
    -
    
    
    
    -
    
    
    
    (146
    )Trading portfolio  other
    
    
    13
    
    
    
    23
    
    
    
    (3
    )Other
    
    
    8
    
    
    
    6
    
    
    
    19Gross investment income
    
    
    2,370
    
    
    
    2,370
    
    
    
    1,670Investment expenses
    
    
    (54
    )
    
    
    (50
    )
    
    
    (51
    )Net investment income
    
    $
    2,316
    
    
    $
    2,320
    
    
    $
    1,619
    39




---



##### Table of Contents



Net Realized Investment Gains (Losses)
  Net Realized Investment Gains (Losses)
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Fixed maturity securities:U.S. Treasury and obligations of government agencies
    
    $
    3
    
    
    $
    (53
    )
    
    $
    235Asset-backed
    
    
    44
    
    
    
    (778
    )
    
    
    (476
    )States, municipalities and political subdivisions
    
    
    (128
    )
    
    
    (20
    )
    
    
    53Foreign government
    
    
    2
    
    
    
    38
    
    
    
    7Corporate and other bonds
    
    
    164
    
    
    
    (345
    )
    
    
    (650
    )Redeemable preferred stock
    
    
    7
    
    
    
    (9
    )
    
    
    -Total fixed maturity securities
    
    
    92
    
    
    
    (1,167
    )
    
    
    (831
    )Equity securities
    
    
    (2
    )
    
    
    243
    
    
    
    (490
    )Derivative securities
    
    
    (1
    )
    
    
    51
    
    
    
    (19
    )Short term investments and other
    
    
    (3
    )
    
    
    16
    
    
    
    43Net realized investment gains (losses), net of participating
policyholders interests
    
    
    86
    
    
    
    (857
    )
    
    
    (1,297
    )Income tax (expense) benefit on net realized investment gains (losses)
    
    
    (36
    )
    
    
    296
    
    
    
    456Net realized investment (gains) losses, after-tax, attributable to
noncontrolling interests
    
    
    1
    
    
    
    -
    
    
    
    -Net realized investment gains (losses) attributable to CNA
    
    $
    51
    
    
    $
    (561
    )
    
    $
    (841
    )
    40




---



##### Table of Contents



Fixed Maturity Ratings
 December 31
    
    2010
    
    %
    
    2009
    
    %(In millions)U.S. Government and Agencies
    
    $
    3,534
    
    
    
    9
    %
    
    $
    3,705
    
    
    
    10
    %AAA rated
    
    
    4,419
    
    
    
    12
    
    
    
    5,855
    
    
    
    17AA and A rated
    
    
    15,665
    
    
    
    42
    
    
    
    12,464
    
    
    
    35BBB rated
    
    
    10,425
    
    
    
    28
    
    
    
    10,122
    
    
    
    28Non-investment grade
    
    
    3,534
    
    
    
    9
    
    
    
    3,466
    
    
    
    10Total
    
    $
    37,577
    
    
    
    100
    %
    
    $
    35,612
    
    
    
    100
    %
  Non-investment Grade
 December 31
    
    2010
    
    %
    
    2009
    
    %(In millions)BB
    
    $
    1,492
    
    
    
    42
    %
    
    $
    1,352
    
    
    
    39
    %B
    
    
    1,163
    
    
    
    33
    
    
    
    1,255
    
    
    
    36CCC - C
    
    
    801
    
    
    
    23
    
    
    
    761
    
    
    
    22D
    
    
    78
    
    
    
    2
    
    
    
    98
    
    
    
    3Total
    
    $
    3,534
    
    
    
    100
    %
    
    $
    3,466
    
    
    
    100
    %
     Maturity Profile
 Percent of
    
    Percent ofFair Value
    
    Unrealized LossDue in one year or less
    
    
    5
    %
    
    
    4
    %Due after one year through five years
    
    
    19
    
    
    
    11Due after five years through ten years
    
    
    26
    
    
    
    24Due after ten years
    
    
    50
    
    
    
    61Total
    
    
    100
    %
    
    
    100
    %
 41




---



##### Table of Contents



Duration
    Effective Durations
 December 31, 2010
    
    
    December 31, 2009Effective Duration
    
    
    
    
    
    
    Effective DurationFair Value
    
    (In years)
    
    Fair Value
    
    (In years)(In millions)Segregated investments
    
    $
    11,516
    
    
    
    10.9
    
    
    $
    10,376
    
    
    
    11.2Other interest sensitive investments
    
    
    28,405
    
    
    
    4.6
    
    
    
    29,665
    
    
    
    4.0Total Fair Value
    
    $
    39,921
    
    
    
    6.4
    
    
    $
    40,041
    
    
    
    5.8
  42




---



##### Table of Contents



Asset-Backed Exposure
 Asset-Backed Distribution
 Security TypeDecember 31, 2010
    
    RMBS (a)
    
    CMBS (b)
    
    Other ABS (c)
    
    Total(In millions)U.S. Government Agencies
    
    $
    3,367
    
    
    $
    30
    
    
    $
    -
    
    
    $
    3,397AAA
    
    
    1,172
    
    
    
    194
    
    
    
    551
    
    
    
    1,917AA
    
    
    206
    
    
    
    257
    
    
    
    154
    
    
    
    617A
    
    
    190
    
    
    
    246
    
    
    
    26
    
    
    
    462BBB
    
    
    228
    
    
    
    116
    
    
    
    19
    
    
    
    363Non-investment grade and equity tranches
    
    
    927
    
    
    
    150
    
    
    
    13
    
    
    
    1,090Total Fair Value
    
    $
    6,090
    
    
    $
    993
    
    
    $
    763
    
    
    $
    7,846Total Amortized Cost
    
    $
    6,254
    
    
    $
    994
    
    
    $
    753
    
    
    $
    8,001Sub-prime (included above)Fair Value
    
    $
    483
    
    
    $
    -
    
    
    $
    -
    
    
    $
    483Amortized Cost
    
    $
    527
    
    
    $
    -
    
    
    $
    -
    
    
    $
    527Alt-A (included above)Fair Value
    
    $
    632
    
    
    $
    -
    
    
    $
    -
    
    
    $
    632Amortized Cost
    
    $
    662
    
    
    $
    -
    
    
    $
    -
    
    
    $
    662
 (a)
    
    Residential mortgage-backed securities (RMBS)(b)
    
    Commercial mortgage-backed securities (CMBS)(c)
    
    Other asset-backed securities (Other ABS)
   Short Term Investments
  Short Term Investments
 December 31,
    
    December 31,2010
    
    2009(In millions)Short term investments available-for-sale:Commercial paper
    
    $
    686
    
    
    $
    185U.S. Treasury securities
    
    
    903
    
    
    
    3,025Money market funds
    
    
    94
    
    
    
    179Other
    
    
    532
    
    
    
    560Total short term investments
    
    $
    2,215
    
    
    $
    3,949
 43




---



##### Table of Contents



Separate Accounts
  Separate Account Bond Ratings
 December 31
    
    2010
    
    %
    
    2009
    
    %(In millions)U.S. Government Agencies
    
    $
    53
    
    
    
    13
    %
    
    $
    67
    
    
    
    18
    %AAA rated
    
    
    18
    
    
    
    5
    
    
    
    17
    
    
    
    5AA and A rated
    
    
    214
    
    
    
    53
    
    
    
    176
    
    
    
    46BBB rated
    
    
    99
    
    
    
    24
    
    
    
    93
    
    
    
    24Non-investment grade
    
    
    21
    
    
    
    5
    
    
    
    27
    
    
    
    7Total
    
    $
    405
    
    
    
    100
    %
    
    $
    380
    
    
    
    100
    %
  44




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
        2008 Senior Preferred
  45




---



##### Table of Contents



Liquidity
   Dividends
    CNA Surety
  46




---



##### Table of Contents



Commitments, Contingencies, and Guarantees
   Contractual Commitments
 December 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    Less than 1 year
    
    1-3 years
    
    3-5 years
    
    years(In millions)Debt (a)
    
    $
    3,831
    
    
    $
    570
    
    
    $
    357
    
    
    $
    798
    
    
    $
    2,106Lease obligations
    
    
    168
    
    
    
    38
    
    
    
    65
    
    
    
    40
    
    
    
    25Claim and claim expense reserves (b)
    
    
    27,238
    
    
    
    5,769
    
    
    
    7,850
    
    
    
    4,126
    
    
    
    9,493Future policy benefits reserves (c)
    
    
    13,101
    
    
    
    173
    
    
    
    602
    
    
    
    320
    
    
    
    12,006Policyholder funds reserves (c)
    
    
    137
    
    
    
    23
    
    
    
    13
    
    
    
    5
    
    
    
    96Guaranteed payment contracts (d)
    
    
    28
    
    
    
    27
    
    
    
    1
    
    
    
    -
    
    
    
    -Total (e)
    
    $
    44,503
    
    
    $
    6,600
    
    
    $
    8,888
    
    
    $
    5,289
    
    
    $
    23,726
 (a)
    
    Includes estimated future interest payments.(b)
    
    Claim and claim adjustment expense reserves are not discounted and represent our estimate of
the amount and timing of the ultimate settlement and administration of gross claims based on
our assessment of facts and circumstances known as of December 31, 2010. See the Reserves 
Estimates and Uncertainties section of this MD&A for further information.(c)
    
    Future policy benefits and policyholder funds reserves are not discounted and represent our
estimate of the ultimate amount and timing of the settlement of benefits based on our
assessment of facts and circumstances known as of December 31, 2010. Future policy benefit
reserves of $747 million and policyholder fund reserves of $37 million related to business
which has been 100% ceded to unaffiliated parties in connection with the sale of our
individual life business in 2004 are not included. Additional information on future policy
benefits and policyholder funds reserves is included in Note A to the Consolidated Financial
Statements under Item 8.(d)
    
    Primarily relating to outsourced services and software.(e)
    
    Does not include expected estimated contribution of $73 million to our pension and
postretirement plans in 2011.
  47




---



##### Table of Contents



Ratings
   Insurance Financial Strength Ratings
    
    Corporate Debt RatingsProperty & Casualty
    
    Life
    
    CNAF
    
    ContinentalCCC Group
    
    CAC
    
    Senior Debt
    
    Senior DebtA.M. Best
    
    A
    
    A-
    
    bbb
    
    Not ratedMoodys
    
    A3
    
    Not rated
    
    Baa3
    
    Baa3S&P
    
    A-
    
    Not rated
    
    BBB-
    
    BBB-
     Accounting Standards Updates
  48




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
  Company-Specific Factors
 
    
    the risks and uncertainties associated with our loss reserves, as outlined in the
Critical Accounting Estimates and the Reserves  Estimates and Uncertainties sections
included in this MD&A, including the sufficiency of the reserves and the possibility for
future increases;
    
    the risk that the other parties to the transaction in which, subject to certain
limitations, we ceded our legacy A&EP liabilities will not fully perform their obligations to
CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the possible
continued exposure of CNA to liabilities for A&EP claims that are not covered under the terms
of the transaction;
    
    the performance of reinsurance companies under reinsurance contracts with us; and
    
    the consummation of contemplated transactions.
 Industry and General Market Factors
 
    
    the impact of competitive products, policies and pricing and the competitive
environment in which we operate, including changes in our book of business;
    
    product and policy availability and demand and market responses, including the
level of ability to obtain rate increases and decline or non-renew under priced accounts, to
achieve premium targets and profitability and to realize growth and retention estimates;
    
    general economic and business conditions, including recessionary conditions that
may decrease the size and number of our insurance customers and create additional losses to
our lines of business, especially those that provide management and professional liability
insurance, as well as surety bonds, to businesses engaged in real estate, financial services
and professional services, and inflationary pressures on medical care costs, construction
costs and other economic sectors that increase the severity of claims;
    
    conditions in the capital and credit markets, including continuing uncertainty and
instability in these markets, as well as the overall economy, and their impact on the returns,
types, liquidity and valuation of our investments;
    
    conditions in the capital and credit markets that may limit our ability to raise
significant amounts of capital on favorable terms, as well as restrictions on the ability or
willingness of Loews to provide additional capital support to us; and
    
    the possibility of changes in our ratings by ratings agencies, including the
inability to access certain markets or distribution channels and the required
collateralization of future payment obligations as a result of such changes, and changes in
rating agency policies and practices.
 49




---



##### Table of Contents



Regulatory Factors
 
    
    regulatory initiatives and compliance with governmental regulations, judicial
interpretations within the regulatory framework, including interpretation of policy
provisions, decisions regarding coverage and theories of liability, trends in litigation and
the outcome of any litigation involving us, and rulings and changes in tax laws and
regulations;
    
    regulatory limitations, impositions and restrictions upon us, including the
effects of assessments and other surcharges for guaranty funds and second-injury funds, other
mandatory pooling arrangements and future assessments levied on insurance companies as well as
the new federal financial regulatory reform of the insurance industry established by the
Dodd-Frank Wall Street Reform and Consumer Protection Act;
    
    increased operating costs and underwriting losses arising from the Patient
Protection and Affordable Care Act and the related amendments in the Health Care and Education
Reconciliation Act, as well as health care reform proposals at the state level; and
    
    regulatory limitations and restrictions, including limitations upon our ability to
receive dividends from our insurance subsidiaries imposed by state regulatory agencies and
minimum risk-based capital standards established by the National Association of Insurance
Commissioners.
 Impact of Catastrophic Events and Related Developments
 
    
    weather and other natural physical events, including the severity and frequency of
storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and
earthquakes, as well as climate change, including effects on weather patterns, greenhouse
gases, sea, land and air temperatures, sea levels, rain and snow;
    
    regulatory requirements imposed by coastal state regulators in the wake of
hurricanes or other natural disasters, including limitations on the ability to exit markets or
to non-renew, cancel or change terms and conditions in policies, as well as mandatory
assessments to fund any shortfalls arising from the inability of quasi-governmental insurers
to pay claims;
    
    man-made disasters, including the possible occurrence of terrorist attacks and the
effect of the absence or insufficiency of applicable terrorism legislation on coverages;
    
    the unpredictability of the nature, targets, severity or frequency of potential
terrorist events, as well as the uncertainty as to our ability to contain our terrorism
exposure effectively; and
    
    the occurrence of epidemics.
  50




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    Sensitivity Analysis
        51




---



##### Table of Contents



Market Risk Scenario 1Increase (Decrease)ForeignMarket
    
    
    Interest
    
    
    Currency
    
    
    Equity PriceDecember 31, 2010
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    137
    
    
    $
    (4
    )
    
    $
    -
    
    
    $
    -Asset-backed
    
    
    7,846
    
    
    
    (376
    )
    
    
    (2
    )
    
    
    -States, municipalities and political subdivisions
    
    
    7,889
    
    
    
    (799
    )
    
    
    -
    
    
    
    -Foreign government
    
    
    620
    
    
    
    (18
    )
    
    
    (60
    )
    
    
    -Corporate and other bonds
    
    
    21,025
    
    
    
    (1,216
    )
    
    
    (100
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (3
    )
    
    
    -
    
    
    
    (2
    )Total fixed maturity securities available-for-sale
    
    
    37,571
    
    
    
    (2,416
    )
    
    
    (162
    )
    
    
    (2
    )Fixed maturity securities trading
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    440
    
    
    
    (26
    )
    
    
    -
    
    
    
    (44
    )Short term investments
    
    
    2,215
    
    
    
    (7
    )
    
    
    (21
    )
    
    
    -Limited partnerships
    
    
    2,309
    
    
    
    1
    
    
    
    -
    
    
    
    (52
    )Other invested assets
    
    
    114
    
    
    
    (7
    )
    
    
    -
    
    
    
    -Total general account
    
    
    42,655
    
    
    
    (2,455
    )
    
    
    (183
    )
    
    
    (98
    )Separate accounts:Fixed maturity securities
    
    
    405
    
    
    
    (18
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    22
    
    
    
    -
    
    
    
    -
    
    
    
    (2
    )Short term investments
    
    
    19
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    446
    
    
    
    (18
    )
    
    
    -
    
    
    
    (2
    )Derivative financial instruments, included in Other liabilities
    
    
    (2
    )
    
    
    -
    
    
    
    2
    
    
    
    -Total securities
    
    $
    43,099
    
    
    $
    (2,473
    )
    
    $
    (181
    )
    
    $
    (100
    )Long term debt (carrying value)
    
    $
    2,251
    
    
    $
    (127
    )
    
    $
    -
    
    
    $
    -
 52




---



##### Table of Contents



Market Risk Scenario 1Increase (Decrease)ForeignMarket
    
    
    Interest
    
    
    Currency
    
    
    Equity PriceDecember 31, 2009
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    199
    
    
    $
    (5
    )
    
    $
    -
    
    
    $
    -Asset-backed
    
    
    8,353
    
    
    
    (232
    )
    
    
    (2
    )
    
    
    -States, municipalities and political subdivisions
    
    
    7,124
    
    
    
    (700
    )
    
    
    -
    
    
    
    -Foreign government
    
    
    479
    
    
    
    (11
    )
    
    
    (44
    )
    
    
    -Corporate and other bonds
    
    
    19,229
    
    
    
    (1,131
    )
    
    
    (87
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (3
    )
    
    
    -
    
    
    
    (2
    )Total fixed maturity securities available-for-sale
    
    
    35,438
    
    
    
    (2,082
    )
    
    
    (133
    )
    
    
    (2
    )Fixed maturity securities trading
    
    
    174
    
    
    
    (17
    )
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    644
    
    
    
    -
    
    
    
    -
    
    
    
    (65
    )Short term investments
    
    
    3,949
    
    
    
    (12
    )
    
    
    (32
    )
    
    
    -Limited partnerships
    
    
    1,787
    
    
    
    1
    
    
    
    -
    
    
    
    (59
    )Other invested assets
    
    
    4
    
    
    
    20
    
    
    
    -
    
    
    
    -Total general account
    
    
    41,996
    
    
    
    (2,090
    )
    
    
    (165
    )
    
    
    (126
    )Separate accounts:Fixed maturity securities
    
    
    380
    
    
    
    (15
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    32
    
    
    
    -
    
    
    
    -
    
    
    
    (3
    )Short term investments
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    418
    
    
    
    (15
    )
    
    
    -
    
    
    
    (3
    )Derivative financial instruments, included in Other liabilities
    
    
    (11
    )
    
    
    1
    
    
    
    -
    
    
    
    -Total securities
    
    $
    42,403
    
    
    $
    (2,104
    )
    
    $
    (165
    )
    
    $
    (129
    )Long term debt (carrying value)
    
    $
    2,303
    
    
    $
    (109
    )
    
    $
    -
    
    
    $
    -
 53




---



##### Table of Contents



Market Risk Scenario 2Increase (Decrease)ForeignMarket
    
    
    Interest
    
    
    Currency
    
    
    Equity PriceDecember 31, 2010
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    137
    
    
    $
    (6
    )
    
    $
    -
    
    
    $
    -Asset-backed
    
    
    7,846
    
    
    
    (570
    )
    
    
    (5
    )
    
    
    -States, municipalities and political subdivisions
    
    
    7,889
    
    
    
    (1,153
    )
    
    
    -
    
    
    
    -Foreign government
    
    
    620
    
    
    
    (26
    )
    
    
    (119
    )
    
    
    -Corporate and other bonds
    
    
    21,025
    
    
    
    (1,784
    )
    
    
    (199
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (5
    )
    
    
    -
    
    
    
    (5
    )Total fixed maturity securities available-for-sale
    
    
    37,571
    
    
    
    (3,544
    )
    
    
    (323
    )
    
    
    (5
    )Fixed maturity securities trading
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    440
    
    
    
    (44
    )
    
    
    (1
    )
    
    
    (110
    )Short term investments
    
    
    2,215
    
    
    
    (10
    )
    
    
    (42
    )
    
    
    -Limited partnerships
    
    
    2,309
    
    
    
    1
    
    
    
    -
    
    
    
    (130
    )Other invested assets
    
    
    114
    
    
    
    (11
    )
    
    
    1
    
    
    
    -Total general account
    
    
    42,655
    
    
    
    (3,608
    )
    
    
    (365
    )
    
    
    (245
    )Separate accounts:Fixed maturity securities
    
    
    405
    
    
    
    (26
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    22
    
    
    
    -
    
    
    
    -
    
    
    
    (5
    )Short term investments
    
    
    19
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    446
    
    
    
    (26
    )
    
    
    -
    
    
    
    (5
    )Derivative financial instruments, included in Other liabilities
    
    
    (2
    )
    
    
    -
    
    
    
    3
    
    
    
    -Total securities
    
    $
    43,099
    
    
    $
    (3,634
    )
    
    $
    (362
    )
    
    $
    (250
    )Long term debt (carrying value)
    
    $
    2,251
    
    
    $
    (187
    )
    
    $
    -
    
    
    $
    -
 54




---



##### Table of Contents



Market Risk Scenario 2Increase (Decrease)ForeignMarket
    
    
    Interest
    
    
    Currency
    
    
    Equity PriceDecember 31, 2009
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    199
    
    
    $
    (7
    )
    
    $
    -
    
    
    $
    -Asset-backed
    
    
    8,353
    
    
    
    (318
    )
    
    
    (4
    )
    
    
    -States, municipalities and political subdivisions
    
    
    7,124
    
    
    
    (1,013
    )
    
    
    -
    
    
    
    -Foreign government
    
    
    479
    
    
    
    (17
    )
    
    
    (89
    )
    
    
    -Corporate and other bonds
    
    
    19,229
    
    
    
    (1,641
    )
    
    
    (172
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (5
    )
    
    
    -
    
    
    
    (5
    )Total fixed maturity securities available-for-sale
    
    
    35,438
    
    
    
    (3,001
    )
    
    
    (265
    )
    
    
    (5
    )Fixed maturity securities trading
    
    
    174
    
    
    
    (19
    )
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    644
    
    
    
    -
    
    
    
    (1
    )
    
    
    (161
    )Short term investments
    
    
    3,949
    
    
    
    (19
    )
    
    
    (64
    )
    
    
    -Limited partnerships
    
    
    1,787
    
    
    
    1
    
    
    
    -
    
    
    
    (148
    )Other invested assets
    
    
    4
    
    
    
    30
    
    
    
    -
    
    
    
    -Total general account
    
    
    41,996
    
    
    
    (3,008
    )
    
    
    (330
    )
    
    
    (314
    )Separate accounts:Fixed maturity securities
    
    
    380
    
    
    
    (22
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    32
    
    
    
    -
    
    
    
    -
    
    
    
    (8
    )Short term investments
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    418
    
    
    
    (22
    )
    
    
    -
    
    
    
    (8
    )Derivative financial instruments, included in Other liabilities
    
    
    (11
    )
    
    
    -
    
    
    
    -
    
    
    
    -Total securities
    
    $
    42,403
    
    
    $
    (3,030
    )
    
    $
    (330
    )
    
    $
    (322
    )Long term debt (carrying value)
    
    $
    2,303
    
    
    $
    (160
    )
    
    $
    -
    
    
    $
    -
 55




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 CNA Financial Corporation
 
 Consolidated Statements of Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions, except per share data)RevenuesNet earned premiums
    
    $
    6,515
    
    
    $
    6,721
    
    
    $
    7,151Net investment income
    
    
    2,316
    
    
    
    2,320
    
    
    
    1,619Net realized investment gains (losses), net of participating
policyholders interests:Other-than-temporary impairment losses
    
    
    (254
    )
    
    
    (1,657
    )
    
    
    (1,484
    )Portion of other-than-temporary impairment losses recognized
in Other comprehensive income
    
    
    22
    
    
    
    305
    
    
    
    -Net other-than-temporary impairment losses recognized in earnings
    
    
    (232
    )
    
    
    (1,352
    )
    
    
    (1,484
    )Other net realized investment gains
    
    
    318
    
    
    
    495
    
    
    
    187Net realized investment gains (losses), net of participating
policyholders interests
    
    
    86
    
    
    
    (857
    )
    
    
    (1,297
    )Other revenues
    
    
    292
    
    
    
    288
    
    
    
    326Total revenues
    
    
    9,209
    
    
    
    8,472
    
    
    
    7,799Claims, Benefits and ExpensesInsurance claims and policyholders benefits
    
    
    4,985
    
    
    
    5,290
    
    
    
    5,723Amortization of deferred acquisition costs
    
    
    1,387
    
    
    
    1,417
    
    
    
    1,467Other operating expenses (Note F)
    
    
    1,568
    
    
    
    1,097
    
    
    
    1,037Interest
    
    
    157
    
    
    
    128
    
    
    
    134Total claims, benefits and expenses
    
    
    8,097
    
    
    
    7,932
    
    
    
    8,361Income (loss) from continuing operations before income tax
    
    
    1,112
    
    
    
    540
    
    
    
    (562
    )Income tax (expense) benefit
    
    
    (333
    )
    
    
    (57
    )
    
    
    311Income (loss) from continuing operations
    
    
    779
    
    
    
    483
    
    
    
    (251
    )Income (loss) from discontinued operations, net of income tax
(expense) benefit of $0, $0 and $9 (Note F)
    
    
    (21
    )
    
    
    (2
    )
    
    
    9Net income (loss)
    
    
    758
    
    
    
    481
    
    
    
    (242
    )Net (income) loss attributable to noncontrolling interests
    
    
    (68
    )
    
    
    (62
    )
    
    
    (57
    )Net income (loss) attributable to CNA
    
    $
    690
    
    
    $
    419
    
    
    $
    (299
    )Income (Loss) Attributable to CNA Common StockholdersIncome (loss) from continuing operations attributable to CNA
    
    $
    711
    
    
    $
    421
    
    
    $
    (308
    )Dividends on 2008 Senior Preferred
    
    
    (76
    )
    
    
    (122
    )
    
    
    (19
    )Income (loss) from continuing operations attributable to CNA common
stockholders
    
    
    635
    
    
    
    299
    
    
    
    (327
    )Income (loss) from discontinued operations attributable to CNA common
stockholders
    
    
    (21
    )
    
    
    (2
    )
    
    
    9Income (loss) attributable to CNA common stockholders
    
    $
    614
    
    
    $
    297
    
    
    $
    (318
    )
  56




---



##### Table of Contents



Years ended December 31
    
    2010
    
    2009
    
    2008(In millions, except per share data)Basic and Diluted Earnings (Loss)
Per Share Attributable to CNA
Common StockholdersIncome (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    2.36
    
    
    $
    1.11
    
    
    $
    (1.21
    )Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.08
    )
    
    
    (0.01
    )
    
    
    0.03Basic and diluted earnings (loss)
per share attributable to CNA
common stockholders
    
    $
    2.28
    
    
    $
    1.10
    
    
    $
    (1.18
    )Weighted Average Outstanding Common
Stock and Common Stock EquivalentsBasic
    
    
    269.1
    
    
    
    269.0
    
    
    
    269.4Diluted
    
    
    269.5
    
    
    
    269.1
    
    
    
    269.4
  57




---



##### Table of Contents



CNA Financial Corporation
 
 Consolidated Statements of Comprehensive Income (Loss)
 Years ended December 31
    
    2010
    
    
    2009
    
    
    2008(In millions)
    
    Tax
    
    After-tax
    
    Tax
    
    After-tax
    
    Tax
    
    After-taxOther Comprehensive Income (Loss)Changes in:Net unrealized gains (losses) on investments
with other-than-temporary impairments
    
    $
    (47
    )
    
    $
    86
    
    
    $
    52
    
    
    $
    (95
    )
    
    $
    -
    
    
    $
    -Net unrealized gains (losses) on other
investments
    
    
    (269
    )
    
    
    505
    
    
    
    (2,024
    )
    
    
    3,741
    
    
    
    1,926
    
    
    
    (3,553
    )Net unrealized gains (losses) on investments
    
    
    (316
    )
    
    
    591
    
    
    
    (1,972
    )
    
    
    3,646
    
    
    
    1,926
    
    
    
    (3,553
    )Net unrealized gains (losses) on discontinued
operations and other
    
    
    (2
    )
    
    
    9
    
    
    
    (2
    )
    
    
    9
    
    
    
    6
    
    
    
    (6
    )Foreign currency translation adjustment
    
    
    -
    
    
    
    49
    
    
    
    -
    
    
    
    117
    
    
    
    -
    
    
    
    (153
    )Pension and postretirement benefits
    
    
    (18
    )
    
    
    35
    
    
    
    (8
    )
    
    
    15
    
    
    
    194
    
    
    
    (363
    )Allocation to participating policyholders
    
    
    -
    
    
    
    (23
    )
    
    
    -
    
    
    
    (40
    )
    
    
    -
    
    
    
    32Other comprehensive income (loss)
    
    $
    (336
    )
    
    
    661
    
    
    $
    (1,982
    )
    
    
    3,747
    
    
    $
    2,126
    
    
    
    (4,043
    )Net income (loss)
    
    
    
    
    
    
    758
    
    
    
    
    
    
    
    481
    
    
    
    
    
    
    
    (242
    )Comprehensive income (loss)
    
    
    
    
    
    
    1,419
    
    
    
    
    
    
    
    4,228
    
    
    
    
    
    
    
    (4,285
    )Changes in:Net unrealized (gains) losses on investments
attributable to noncontrolling interests
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    11Pension and postretirement benefits
attributable to noncontrolling interests
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    5Other comprehensive (income) loss attributable to
noncontrolling interests
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    16Net (income) loss attributable to noncontrolling
interests
    
    
    
    
    
    
    (68
    )
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (57
    )Comprehensive (income) loss attributable to
noncontrolling interests
    
    
    
    
    
    
    (80
    )
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    (41
    )Total comprehensive income (loss) attributable to CNA
    
    
    
    
    
    $
    1,339
    
    
    
    
    
    
    $
    4,140
    
    
    
    
    
    
    $
    (4,326
    )
  58




---



##### Table of Contents



CNA Financial Corporation
 
 Consolidated Balance Sheets
 December 31
    
    2010
    
    2009(In millions, except share data)AssetsInvestments:Fixed maturity securities at fair value (amortized cost of $36,427 and $35,602)
    
    $
    37,577
    
    
    $
    35,612Equity securities at fair value (cost of $422 and $633)
    
    
    440
    
    
    
    644Limited partnership investments
    
    
    2,309
    
    
    
    1,787Other invested assets
    
    
    27
    
    
    
    4Mortgage loans
    
    
    87
    
    
    
    -Short term investments
    
    
    2,215
    
    
    
    3,949Total investments
    
    
    42,655
    
    
    
    41,996Cash
    
    
    77
    
    
    
    140Reinsurance receivables (less allowance for uncollectible receivables of $125 and $351)
    
    
    7,079
    
    
    
    6,581Insurance receivables (less allowance for uncollectible receivables of $160 and $202)
    
    
    1,557
    
    
    
    1,656Accrued investment income
    
    
    425
    
    
    
    416Deferred acquisition costs
    
    
    1,079
    
    
    
    1,108Deferred income taxes
    
    
    667
    
    
    
    1,333Property and equipment at cost (less accumulated depreciation of $543 and $498)
    
    
    333
    
    
    
    360Goodwill and other intangible assets
    
    
    141
    
    
    
    141Other assets (includes $139 and $320 due from Loews Corporation)
    
    
    868
    
    
    
    1,144Separate account business
    
    
    450
    
    
    
    423Total assets
    
    $
    55,331
    
    
    $
    55,298Liabilities and EquityLiabilities:Insurance reserves:Claim and claim adjustment expenses
    
    $
    25,496
    
    
    $
    26,816Unearned premiums
    
    
    3,203
    
    
    
    3,274Future policy benefits
    
    
    8,718
    
    
    
    7,981Policyholders funds
    
    
    173
    
    
    
    192Participating policyholders funds
    
    
    60
    
    
    
    56Short term debt
    
    
    400
    
    
    
    -Long term debt
    
    
    2,251
    
    
    
    2,303Other liabilities
    
    
    3,056
    
    
    
    3,087Separate account business
    
    
    450
    
    
    
    423Total liabilities
    
    
    43,807
    
    
    
    44,132Commitments and contingencies (Notes B, C, G, I , and K)Equity:Preferred stock (12,500,000 shares authorized)
2008 Senior Preferred (no par value; $100,000 stated value; no shares and 10,000
shares issued and outstanding held by Loews Corporation)
    
    
    -
    
    
    
    1,000Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares
issued; 269,139,198 and 269,026,759 shares outstanding)
    
    
    683
    
    
    
    683Additional paid-in capital
    
    
    2,200
    
    
    
    2,177Retained earnings
    
    
    7,876
    
    
    
    7,264Accumulated other comprehensive income (loss)
    
    
    326
    
    
    
    (325
    )Treasury stock (3,901,045 and 4,013,484 shares), at cost
    
    
    (105
    )
    
    
    (109
    )Notes receivable for the issuance of common stock
    
    
    (26
    )
    
    
    (30
    )Total CNA stockholders equity
    
    
    10,954
    
    
    
    10,660Noncontrolling interests
    
    
    570
    
    
    
    506Total equity
    
    
    11,524
    
    
    
    11,166Total liabilities and equity
    
    $
    55,331
    
    
    $
    55,298
  59




---



##### Table of Contents



CNA Financial Corporation
 
 Consolidated Statements of Cash Flows
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    758
    
    
    $
    481
    
    
    $
    (242
    )Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities:(Income) loss from discontinued operations
    
    
    21
    
    
    
    2
    
    
    
    (9
    )Loss on disposal of property and equipment
    
    
    -
    
    
    
    14
    
    
    
    1Deferred income tax expense (benefit)
    
    
    327
    
    
    
    177
    
    
    
    (174
    )Trading portfolio activity
    
    
    153
    
    
    
    (164
    )
    
    
    644Net realized investment (gains) losses, net of
participating policyholders interests
    
    
    (86
    )
    
    
    857
    
    
    
    1,297Equity method investees
    
    
    (136
    )
    
    
    (223
    )
    
    
    446Amortization of investments
    
    
    (117
    )
    
    
    (198
    )
    
    
    (278
    )Depreciation
    
    
    78
    
    
    
    86
    
    
    
    78Changes in:Receivables, net
    
    
    (406
    )
    
    
    976
    
    
    
    987Accrued investment income
    
    
    (15
    )
    
    
    (60
    )
    
    
    (26
    )Deferred acquisition costs
    
    
    29
    
    
    
    17
    
    
    
    36Insurance reserves
    
    
    (805
    )
    
    
    (612
    )
    
    
    (590
    )Other assets
    
    
    142
    
    
    
    99
    
    
    
    (241
    )Other liabilities
    
    
    53
    
    
    
    (174
    )
    
    
    (372
    )Other, net
    
    
    5
    
    
    
    3
    
    
    
    9Total adjustments
    
    
    (757
    )
    
    
    800
    
    
    
    1,808Net cash flows provided by operating activities-continuing operations
    
    $
    1
    
    
    $
    1,281
    
    
    $
    1,566Net cash flows used by operating activities-discontinued operations
    
    $
    (90
    )
    
    $
    (23
    )
    
    $
    (8
    )Net cash flows provided (used) by operating activities-total
    
    $
    (89
    )
    
    $
    1,258
    
    
    $
    1,558Cash Flows from Investing ActivitiesPurchases of fixed maturity securities
    
    $
    (16,704
    )
    
    $
    (24,189
    )
    
    $
    (48,404
    )Proceeds from fixed maturity securities:Sales
    
    
    12,514
    
    
    
    19,245
    
    
    
    41,749Maturities, calls and redemptions
    
    
    3,340
    
    
    
    3,448
    
    
    
    4,092Purchases of equity securities
    
    
    (99
    )
    
    
    (269
    )
    
    
    (205
    )Proceeds from sales of equity securities
    
    
    341
    
    
    
    901
    
    
    
    220Origination of mortgage loans
    
    
    (87
    )
    
    
    -
    
    
    
    -Change in short term investments
    
    
    1,629
    
    
    
    (327
    )
    
    
    1,032Change in other investments
    
    
    (263
    )
    
    
    140
    
    
    
    (295
    )Purchases of property and equipment
    
    
    (53
    )
    
    
    (63
    )
    
    
    (104
    )Dispositions
    
    
    66
    
    
    
    -
    
    
    
    -Other, net
    
    
    7
    
    
    
    (2
    )
    
    
    (11
    )Net cash flows provided (used) by investing activities-continuing
operations
    
    $
    691
    
    
    $
    (1,116
    )
    
    $
    (1,926
    )Net cash flows provided by investing activities-discontinued operations
    
    $
    76
    
    
    $
    23
    
    
    $
    18Net cash flows provided (used) by investing activities-total
    
    $
    767
    
    
    $
    (1,093
    )
    
    $
    (1,908
    )
  60




---



##### Table of Contents



Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Cash Flows from Financing ActivitiesDividends paid to Loews for 2008 Senior Preferred
    
    $
    (76
    )
    
    $
    (122
    )
    
    $
    (19
    )Dividends paid to common stockholders
    
    
    -
    
    
    
    -
    
    
    
    (122
    )Proceeds from the issuance of debt
    
    
    495
    
    
    
    350
    
    
    
    250Principal payments on debt
    
    
    (150
    )
    
    
    (100
    )
    
    
    (350
    )Policyholders investment contract net deposits (withdrawals)
    
    
    (6
    )
    
    
    (11
    )
    
    
    (604
    )Payments to redeem 2008 Senior Preferred
    
    
    (1,000
    )
    
    
    (250
    )
    
    
    -Proceeds from the issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    -
    
    
    
    1,250Stock options exercised
    
    
    11
    
    
    
    1
    
    
    
    1Purchase of treasury stock
    
    
    -
    
    
    
    -
    
    
    
    (70
    )Other, net
    
    
    (16
    )
    
    
    12
    
    
    
    11Net cash flows provided (used) by financing activities-continuing
operations
    
    $
    (742
    )
    
    $
    (120
    )
    
    $
    347Net cash flows provided (used) by financing activities-discontinued
operations
    
    $
    -
    
    
    $
    -
    
    
    $
    -Net cash flows provided (used) by financing activities-total
    
    $
    (742
    )
    
    $
    (120
    )
    
    $
    347Effect of foreign exchange rate changes on cash-continuing operations
    
    
    1
    
    
    
    10
    
    
    
    (13
    )Net change in cash
    
    $
    (63
    )
    
    $
    55
    
    
    $
    (16
    )Net cash transactions from continuing operations to discontinued operations
    
    
    (14
    )
    
    
    -
    
    
    
    17Net cash transactions to discontinued operations from continuing operations
    
    
    14
    
    
    
    -
    
    
    
    (17
    )Cash, beginning of year
    
    
    140
    
    
    
    85
    
    
    
    101Cash, end of year
    
    $
    77
    
    
    $
    140
    
    
    $
    85Cash-continuing operations
    
    $
    77
    
    
    $
    140
    
    
    $
    85Cash-discontinued operations
    
    
    -
    
    
    
    -
    
    
    
    -Cash-total
    
    $
    77
    
    
    $
    140
    
    
    $
    85
  61




---



##### Table of Contents



CNA Financial Corporation
 
 Consolidated Statements of Stockholders Equity
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Preferred StockBalance, beginning of period
    
    $
    1,000
    
    
    $
    1,250
    
    
    $
    -Issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    -
    
    
    
    1,250Redemption of 2008 Senior Preferred
    
    
    (1,000
    )
    
    
    (250
    )
    
    
    -Balance, end of period
    
    
    -
    
    
    
    1,000
    
    
    
    1,250Common StockBalance, beginning and end of period
    
    
    683
    
    
    
    683
    
    
    
    683Additional Paid-in CapitalBalance, beginning of period
    
    
    2,177
    
    
    
    2,174
    
    
    
    2,169Stock based compensation
    
    
    1
    
    
    
    2
    
    
    
    5Other
    
    
    22
    
    
    
    1
    
    
    
    -Balance, end of period
    
    
    2,200
    
    
    
    2,177
    
    
    
    2,174Retained EarningsBalance, beginning of period
    
    
    7,264
    
    
    
    6,845
    
    
    
    7,285Cumulative effect adjustment from change in
other-than-temporary impairment accounting guidance as of
April 1, 2009, net of tax
    
    
    -
    
    
    
    122
    
    
    
    -Cumulative effect adjustment from change in credit
derivatives accounting guidance as of July 1, 2010, net of
tax
    
    
    (2
    )
    
    
    -
    
    
    
    -Dividends paid to common stockholders
    
    
    -
    
    
    
    -
    
    
    
    (122
    )Dividends paid to Loews Corporation for 2008 Senior Preferred
    
    
    (76
    )
    
    
    (122
    )
    
    
    (19
    )Net income (loss) attributable to CNA
    
    
    690
    
    
    
    419
    
    
    
    (299
    )Balance, end of period
    
    
    7,876
    
    
    
    7,264
    
    
    
    6,845Accumulated Other Comprehensive Income (Loss)Balance, beginning of period
    
    
    (325
    )
    
    
    (3,924
    )
    
    
    103Cumulative effect adjustment from change in
other-than-temporary impairment accounting guidance as of
April 1, 2009, net of tax
    
    
    -
    
    
    
    (122
    )
    
    
    -Cumulative effect adjustment from change in credit
derivatives accounting guidance as of July 1, 2010, net of
tax
    
    
    2
    
    
    
    -
    
    
    
    -Other comprehensive income (loss) attributable to CNA
    
    
    649
    
    
    
    3,721
    
    
    
    (4,027
    )Balance, end of period
    
    
    326
    
    
    
    (325
    )
    
    
    (3,924
    )Treasury StockBalance, beginning of period
    
    
    (109
    )
    
    
    (109
    )
    
    
    (39
    )Stock-based compensation and other
    
    
    4
    
    
    
    -
    
    
    
    -Purchase of treasury stock
    
    
    -
    
    
    
    -
    
    
    
    (70
    )Balance, end of period
    
    
    (105
    )
    
    
    (109
    )
    
    
    (109
    )Notes Receivable for the Issuance of Common StockBalance, beginning of period
    
    
    (30
    )
    
    
    (42
    )
    
    
    (51
    )Decrease in notes receivable for the issuance of common stock
    
    
    4
    
    
    
    12
    
    
    
    9Balance, end of period
    
    
    (26
    )
    
    
    (30
    )
    
    
    (42
    )Total CNA Stockholders Equity
    
    
    10,954
    
    
    
    10,660
    
    
    
    6,877Noncontrolling InterestsBalance, beginning of period
    
    
    506
    
    
    
    420
    
    
    
    385Net income
    
    
    68
    
    
    
    62
    
    
    
    57Other comprehensive income (loss)
    
    
    12
    
    
    
    26
    
    
    
    (16
    )Other
    
    
    (16
    )
    
    
    (2
    )
    
    
    (6
    )Balance, end of period
    
    
    570
    
    
    
    506
    
    
    
    420Total Equity
    
    $
    11,524
    
    
    $
    11,166
    
    
    $
    7,297
  62




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note A. Summary of Significant Accounting Policies
 Basis of Presentation
   Business
    Insurance Operations
 Premiums:
   63




---



##### Table of Contents



Claim and claim adjustment expense reserves:
    Future policy benefits reserves:
 Policyholders funds reserves:
 64




---



##### Table of Contents



Guaranty fund and other insurance-related assessments:
 Reinsurance:
     Participating insurance:
 Deferred acquisition costs:
 65




---



##### Table of Contents



Investments in life settlement contracts and related revenue recognition:
   December 31, 2010

    
    
    
    Fair Value of Life Settlement
    
    Face Amount of Life InsuranceNumber of Life
    
    Contracts
    
    PoliciesSettlement Contracts
    
    (In millions)
    
    (In millions)Estimated maturity during:2011
    
    
    80
    
    
    $
    21
    
    
    $
    552012
    
    
    70
    
    
    
    17
    
    
    
    492013
    
    
    70
    
    
    
    14
    
    
    
    452014
    
    
    60
    
    
    
    12
    
    
    
    412015
    
    
    60
    
    
    
    10
    
    
    
    39Thereafter
    
    
    563
    
    
    
    55
    
    
    
    369Total
    
    
    903
    
    
    $
    129
    
    
    $
    598
   Separate Account Business
 66




---



##### Table of Contents



Investments
 Valuation of investments:
     67




---



##### Table of Contents



Realized investment gains (losses):
 Income Taxes
  Pension and Postretirement Benefits
  Stock-Based Compensation
  Foreign Currency
  Property and Equipment
  Goodwill and Other Intangible Assets
  68




---



##### Table of Contents



Earnings (Loss) Per Share Data
   Supplementary Cash Flow Information
  69




---



##### Table of Contents



Accounting Standards Updates
 Adopted
 Variable Interest Entities
  Scope Exception Related to Credit Derivatives
  Recognition and Presentation of Other-Than-Temporary Impairments
     70




---



##### Table of Contents



Recently issued accounting standard to be adopted
 Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
  71




---



##### Table of Contents



Note B. Investments
  Net Investment Income
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Fixed maturity securities
    
    $
    2,051
    
    
    $
    1,941
    
    
    $
    1,984Short term investments
    
    
    15
    
    
    
    36
    
    
    
    115Limited partnerships
    
    
    249
    
    
    
    315
    
    
    
    (379
    )Equity securities
    
    
    32
    
    
    
    49
    
    
    
    80Mortgage loans
    
    
    2
    
    
    
    -
    
    
    
    -Trading portfolio  indexed group annuity (a)
    
    
    -
    
    
    
    -
    
    
    
    (146
    )Trading portfolio  other (b)
    
    
    13
    
    
    
    23
    
    
    
    (3
    )Other
    
    
    8
    
    
    
    6
    
    
    
    19Gross investment income
    
    
    2,370
    
    
    
    2,370
    
    
    
    1,670Investment expenses
    
    
    (54
    )
    
    
    (50
    )
    
    
    (51
    )Net investment income
    
    $
    2,316
    
    
    $
    2,320
    
    
    $
    1,619
      Net Realized Investment Gains (Losses)
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Net realized investment gains (losses):Fixed maturity securities:Gross realized gains
    
    $
    475
    
    
    $
    500
    
    
    $
    532Gross realized losses
    
    
    (383
    )
    
    
    (1,667
    )
    
    
    (1,363
    )Net realized investment gains (losses) on fixed maturity securities
    
    
    92
    
    
    
    (1,167
    )
    
    
    (831
    )Equity securities:Gross realized gains
    
    
    50
    
    
    
    473
    
    
    
    22Gross realized losses
    
    
    (52
    )
    
    
    (230
    )
    
    
    (512
    )Net realized investment gains (losses) on equity securities
    
    
    (2
    )
    
    
    243
    
    
    
    (490
    )Derivatives
    
    
    (1
    )
    
    
    51
    
    
    
    (19
    )Short term investments and other (a)
    
    
    (3
    )
    
    
    16
    
    
    
    43Net realized investment gains (losses), net of participating
policyholders interests
    
    $
    86
    
    
    $
    (857
    )
    
    $
    (1,297
    )
  72




---



##### Table of Contents



Net Change in Unrealized Gains (Losses)
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Net change in unrealized gains (losses) on investments:Fixed maturity securities
    
    $
    1,140
    
    
    $
    5,278
    
    
    $
    (5,137
    )Equity securities
    
    
    7
    
    
    
    156
    
    
    
    (347
    )Other
    
    
    (1
    )
    
    
    (4
    )
    
    
    5Total net change in unrealized gains (losses) on investments
    
    $
    1,146
    
    
    $
    5,430
    
    
    $
    (5,479
    )
   Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    -
    
    
    $
    -
    
    
    $
    29Asset-backed:Residential mortgage-backed
    
    
    71
    
    
    
    461
    
    
    
    222Commercial mortgage-backed
    
    
    3
    
    
    
    193
    
    
    
    208Other asset-backed
    
    
    3
    
    
    
    31
    
    
    
    35Total asset-backed
    
    
    77
    
    
    
    685
    
    
    
    465States, municipalities and political subdivisions
    
    
    62
    
    
    
    79
    
    
    
    1Foreign government
    
    
    -
    
    
    
    -
    
    
    
    2Corporate and other bonds
    
    
    68
    
    
    
    357
    
    
    
    583Redeemable preferred stock
    
    
    -
    
    
    
    9
    
    
    
    1Total fixed maturity securities available-for-sale
    
    
    207
    
    
    
    1,130
    
    
    
    1,081Equity securities available-for-sale:Common stock
    
    
    11
    
    
    
    5
    
    
    
    140Preferred stock
    
    
    14
    
    
    
    217
    
    
    
    263Total equity securities available-for-sale
    
    
    25
    
    
    
    222
    
    
    
    403Net OTTI losses recognized in earnings
    
    $
    232
    
    
    $
    1,352
    
    
    $
    1,484
    73




---



##### Table of Contents



74




---



##### Table of Contents



Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI LossesDecember 31, 2010
    
    Cost
    
    Gains
    
    Losses
    
    
    Value
    
    
    (Gains)(In millions)Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government
agencies
    
    $
    122
    
    
    $
    16
    
    
    $
    1
    
    
    $
    137
    
    
    $
    -Asset-backed:Residential mortgage-backed
    
    
    6,254
    
    
    
    101
    
    
    
    265
    
    
    
    6,090
    
    
    
    114Commercial mortgage-backed
    
    
    994
    
    
    
    40
    
    
    
    41
    
    
    
    993
    
    
    
    (2
    )Other asset-backed
    
    
    753
    
    
    
    18
    
    
    
    8
    
    
    
    763
    
    
    
    -Total asset-backed
    
    
    8,001
    
    
    
    159
    
    
    
    314
    
    
    
    7,846
    
    
    
    112States, municipalities and political subdivisions
    
    
    8,157
    
    
    
    142
    
    
    
    410
    
    
    
    7,889
    
    
    
    -Foreign government
    
    
    602
    
    
    
    18
    
    
    
    -
    
    
    
    620
    
    
    
    -Corporate and other bonds
    
    
    19,492
    
    
    
    1,603
    
    
    
    70
    
    
    
    21,025
    
    
    
    -Redeemable preferred stock
    
    
    47
    
    
    
    7
    
    
    
    -
    
    
    
    54
    
    
    
    -Total fixed maturity securities available-for-sale
    
    
    36,421
    
    
    
    1,945
    
    
    
    795
    
    
    
    37,571
    
    
    $
    112Total fixed maturity securities trading
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    6Equity securities available-for-sale:Common stock
    
    
    90
    
    
    
    25
    
    
    
    -
    
    
    
    115Preferred stock
    
    
    332
    
    
    
    2
    
    
    
    9
    
    
    
    325Total equity securities available-for-sale
    
    
    422
    
    
    
    27
    
    
    
    9
    
    
    
    440Total
    
    $
    36,849
    
    
    $
    1,972
    
    
    $
    804
    
    
    $
    38,017
 75




---



##### Table of Contents



Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTIDecember 31, 2009
    
    Cost
    
    Gains
    
    Losses
    
    
    Value
    
    
    Losses(In millions)Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government
agencies
    
    $
    184
    
    
    $
    16
    
    
    $
    1
    
    
    $
    199
    
    
    $
    -Asset-backed:Residential mortgage-backed
    
    
    7,469
    
    
    
    72
    
    
    
    604
    
    
    
    6,937
    
    
    
    246Commercial mortgage-backed
    
    
    709
    
    
    
    10
    
    
    
    135
    
    
    
    584
    
    
    
    3Other asset-backed
    
    
    858
    
    
    
    14
    
    
    
    40
    
    
    
    832
    
    
    
    -Total asset-backed
    
    
    9,036
    
    
    
    96
    
    
    
    779
    
    
    
    8,353
    
    
    
    249States, municipalities and political subdivisions
    
    
    7,280
    
    
    
    203
    
    
    
    359
    
    
    
    7,124
    
    
    
    -Foreign government
    
    
    467
    
    
    
    14
    
    
    
    2
    
    
    
    479
    
    
    
    -Corporate and other bonds
    
    
    18,410
    
    
    
    1,107
    
    
    
    288
    
    
    
    19,229
    
    
    
    26Redeemable preferred stock
    
    
    51
    
    
    
    4
    
    
    
    1
    
    
    
    54
    
    
    
    -Total fixed maturity securities available-for-sale
    
    
    35,428
    
    
    
    1,440
    
    
    
    1,430
    
    
    
    35,438
    
    
    $
    275Total fixed maturity securities trading
    
    
    174
    
    
    
    -
    
    
    
    -
    
    
    
    174Equity securities available-for-sale:Common stock
    
    
    61
    
    
    
    14
    
    
    
    2
    
    
    
    73Preferred stock
    
    
    572
    
    
    
    40
    
    
    
    41
    
    
    
    571Total equity securities available-for-sale
    
    
    633
    
    
    
    54
    
    
    
    43
    
    
    
    644Total
    
    $
    36,235
    
    
    $
    1,494
    
    
    $
    1,473
    
    
    $
    36,256
 76




---



##### Table of Contents



Securities in a Gross Unrealized Loss Position
 Less than 12 Months
    
    Greater than 12 Months
    
    TotalGross

    
    
    
    
    
    Gross

    
    
    
    
    
    GrossEstimated

    
    Unrealized

    
    Estimated

    
    Unrealized

    
    Estimated

    
    UnrealizedDecember 31, 2010
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses(In millions)Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government
agencies
    
    $
    8
    
    
    $
    1
    
    
    $
    -
    
    
    $
    -
    
    
    $
    8
    
    
    $
    1Asset-backed:Residential mortgage-backed
    
    
    1,800
    
    
    
    52
    
    
    
    1,801
    
    
    
    213
    
    
    
    3,601
    
    
    
    265Commercial mortgage-backed
    
    
    164
    
    
    
    3
    
    
    
    333
    
    
    
    38
    
    
    
    497
    
    
    
    41Other asset-backed
    
    
    122
    
    
    
    1
    
    
    
    60
    
    
    
    7
    
    
    
    182
    
    
    
    8Total asset-backed
    
    
    2,086
    
    
    
    56
    
    
    
    2,194
    
    
    
    258
    
    
    
    4,280
    
    
    
    314States, municipalities and political
subdivisions
    
    
    3,339
    
    
    
    164
    
    
    
    745
    
    
    
    246
    
    
    
    4,084
    
    
    
    410Corporate and other bonds
    
    
    1,719
    
    
    
    34
    
    
    
    405
    
    
    
    36
    
    
    
    2,124
    
    
    
    70Total fixed maturity securities available-for-sale
    
    
    7,152
    
    
    
    255
    
    
    
    3,344
    
    
    
    540
    
    
    
    10,496
    
    
    
    795Equity securities available-for-sale:Preferred stock
    
    
    175
    
    
    
    5
    
    
    
    70
    
    
    
    4
    
    
    
    245
    
    
    
    9Total equity securities available-for-sale
    
    
    175
    
    
    
    5
    
    
    
    70
    
    
    
    4
    
    
    
    245
    
    
    
    9Total
    
    $
    7,327
    
    
    $
    260
    
    
    $
    3,414
    
    
    $
    544
    
    
    $
    10,741
    
    
    $
    804
 77




---



##### Table of Contents



Securities in a Gross Unrealized Loss Position
 Less than 12 Months
    
    Greater than 12 Months
    
    TotalGross

    
    
    
    
    
    Gross

    
    
    
    
    
    GrossEstimated

    
    Unrealized

    
    Estimated

    
    Unrealized

    
    Estimated

    
    UnrealizedDecember 31, 2009
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses(In millions)Fixed maturity securities available-for-sale:U.S. Treasury and obligations of government
agencies
    
    $
    21
    
    
    $
    1
    
    
    $
    -
    
    
    $
    -
    
    
    $
    21
    
    
    $
    1Asset-backed:Residential mortgage-backed
    
    
    1,945
    
    
    
    43
    
    
    
    3,069
    
    
    
    561
    
    
    
    5,014
    
    
    
    604Commercial mortgage-backed
    
    
    21
    
    
    
    1
    
    
    
    456
    
    
    
    134
    
    
    
    477
    
    
    
    135Other asset-backed
    
    
    170
    
    
    
    1
    
    
    
    119
    
    
    
    39
    
    
    
    289
    
    
    
    40Total asset-backed
    
    
    2,136
    
    
    
    45
    
    
    
    3,644
    
    
    
    734
    
    
    
    5,780
    
    
    
    779States, municipalities and political
subdivisions
    
    
    1,036
    
    
    
    30
    
    
    
    2,086
    
    
    
    329
    
    
    
    3,122
    
    
    
    359Foreign government
    
    
    154
    
    
    
    1
    
    
    
    7
    
    
    
    1
    
    
    
    161
    
    
    
    2Corporate and other bonds
    
    
    2,395
    
    
    
    44
    
    
    
    1,948
    
    
    
    244
    
    
    
    4,343
    
    
    
    288Redeemable preferred stock
    
    
    3
    
    
    
    -
    
    
    
    14
    
    
    
    1
    
    
    
    17
    
    
    
    1Total fixed maturity securities available-for-sale
    
    
    5,745
    
    
    
    121
    
    
    
    7,699
    
    
    
    1,309
    
    
    
    13,444
    
    
    
    1,430Equity securities available-for-sale:Common stock
    
    
    8
    
    
    
    1
    
    
    
    12
    
    
    
    1
    
    
    
    20
    
    
    
    2Preferred stock
    
    
    -
    
    
    
    -
    
    
    
    426
    
    
    
    41
    
    
    
    426
    
    
    
    41Total equity securities available-for-sale
    
    
    8
    
    
    
    1
    
    
    
    438
    
    
    
    42
    
    
    
    446
    
    
    
    43Total
    
    $
    5,753
    
    
    $
    122
    
    
    $
    8,137
    
    
    $
    1,351
    
    
    $
    13,890
    
    
    $
    1,473
   Period from(In millions)
    
    Year ended
    
    April 1, 2009 toDecember 31, 2010
    
    December 31, 2009Beginning balance of credit losses on fixed maturity securities
    
    $
    164
    
    
    $
    192Additional credit losses for which an OTTI loss was previously recognized
    
    
    37
    
    
    
    93Credit losses for which an OTTI loss was not previously recognized
    
    
    11
    
    
    
    183Reductions for securities sold during the period
    
    
    (62
    )
    
    
    (239
    )Reductions for securities the Company intends to sell or more likely than not will be required to sell
    
    
    (9
    )
    
    
    (65
    )Ending balance of credit losses on fixed maturity securities
    
    $
    141
    
    
    $
    164
   78




---



##### Table of Contents



Asset-Backed Securities
      Gross Unrealized Losses by Ratings Distribution
 December 31, 2010
 GrossAmortized

    
    Estimated

    
    UnrealizedCost
    
    Fair Value
    
    LossesU.S. Government Agencies
    
    $
    1,506
    
    
    $
    1,461
    
    
    $
    45AAA
    
    
    1,225
    
    
    
    1,158
    
    
    
    67AA
    
    
    426
    
    
    
    389
    
    
    
    37A
    
    
    217
    
    
    
    201
    
    
    
    16BBB
    
    
    217
    
    
    
    188
    
    
    
    29Non-investment grade and equity tranches
    
    
    1,003
    
    
    
    883
    
    
    
    120Total
    
    $
    4,594
    
    
    $
    4,280
    
    
    $
    314
  States, Municipalities and Political Subdivisions
  79




---



##### Table of Contents



Gross Unrealized Losses by Ratings Distribution
 December 31, 2010
 GrossAmortized

    
    Estimated

    
    UnrealizedCost
    
    Fair Value
    
    LossesAAA
    
    $
    995
    
    
    $
    940
    
    
    $
    55AA
    
    
    2,612
    
    
    
    2,327
    
    
    
    285A
    
    
    802
    
    
    
    742
    
    
    
    60BBB
    
    
    69
    
    
    
    60
    
    
    
    9Non-investment grade
    
    
    16
    
    
    
    15
    
    
    
    1Total
    
    $
    4,494
    
    
    $
    4,084
    
    
    $
    410
   Contractual Maturity
  Contractual Maturity
    
    December 31, 2010
    
    December 31, 2009Cost or
    
    Estimated
    
    Cost or
    
    EstimatedAmortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value(In millions)Due in one year or less
    
    $
    1,515
    
    
    $
    1,506
    
    
    $
    1,240
    
    
    $
    1,219Due after one year through five years
    
    
    11,198
    
    
    
    11,653
    
    
    
    10,046
    
    
    
    10,244Due after five years through ten years
    
    
    10,022
    
    
    
    10,425
    
    
    
    10,646
    
    
    
    10,538Due after ten years
    
    
    13,686
    
    
    
    13,987
    
    
    
    13,496
    
    
    
    13,437Total
    
    $
    36,421
    
    
    $
    37,571
    
    
    $
    35,428
    
    
    $
    35,438
 80




---



##### Table of Contents



Auction Rate Securities
  Limited Partnerships
      Commercial Mortgage Loans
  81




---



##### Table of Contents



Investment Commitments
    Investments on Deposit
   82




---



##### Table of Contents



Note C. Derivative Financial Instruments
          83




---



##### Table of Contents



Credit Ratings of Underlying Reference Obligations
 December 31, 2010
    
    Fair Value of
    
    Maximum Amount of
    
    Weighted(In millions)
    
    Credit Default
    
    Future Payments under
    
    Average YearsSwaps
    
    Credit Default Swaps
    
    to MaturityBB rated
    
    $
    1
    
    
    $
    5
    
    
    
    2.5B rated
    
    
    -
    
    
    
    3
    
    
    
    1.5Total
    
    $
    1
    
    
    $
    8
    
    
    
    2.1
 Credit Ratings of Underlying Reference Obligations
 December 31, 2009
    
    Fair Value of
    
    Maximum Amount of
    
    Weighted(In millions)
    
    Credit Default
    
    Future Payments under
    
    Average YearsSwaps
    
    Credit Default Swaps
    
    to MaturityB rated
    
    $
    -
    
    
    $
    8
    
    
    
    3.1Total
    
    $
    -
    
    
    $
    8
    
    
    
    3.1
   84




---



##### Table of Contents



Recognized Gains (Losses)
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Without hedge designationInterest rate swaps
    
    $
    -
    
    
    $
    61
    
    
    $
    (59
    )Credit default swaps  purchased protection
    
    
    (1
    )
    
    
    (47
    )
    
    
    86Credit default swaps  sold protection
    
    
    -
    
    
    
    3
    
    
    
    (35
    )Total return swaps
    
    
    -
    
    
    
    (2
    )
    
    
    -Futures sold, not yet purchased
    
    
    -
    
    
    
    21
    
    
    
    (11
    )Currency forwards
    
    
    -
    
    
    
    -
    
    
    
    2Options embedded in convertible debt securities
    
    
    -
    
    
    
    -
    
    
    
    1Equity warrants
    
    
    -
    
    
    
    -
    
    
    
    (2
    )Options written
    
    
    -
    
    
    
    15
    
    
    
    -Total
    
    
    (1
    )
    
    
    51
    
    
    
    (18
    )Trading activitiesFutures purchased
    
    
    -
    
    
    
    -
    
    
    
    (131
    )Futures sold, not yet purchased
    
    
    (1
    )
    
    
    (2
    )
    
    
    1Total
    
    $
    (2
    )
    
    $
    49
    
    
    $
    (148
    )
  85




---



##### Table of Contents



Derivative Financial Instruments
 Contractual/December 31, 2010
    
    Notional
    
    Estimated Fair Value(In millions)
    
    Amount
    
    Asset
    
    (Liability)Without hedge designationCredit default swaps  purchased protection
    
    $
    20
    
    
    $
    -
    
    
    $
    (2
    )Credit default swaps  sold protection
    
    
    8
    
    
    
    1
    
    
    
    -Currency forwards
    
    
    18
    
    
    
    -
    
    
    
    -Equity warrants
    
    
    3
    
    
    
    -
    
    
    
    -Total
    
    
    49
    
    
    
    1
    
    
    
    (2
    )Trading activitiesFutures sold, not yet purchased
    
    
    -
    
    
    
    -
    
    
    
    -Total
    
    $
    49
    
    
    $
    1
    
    
    $
    (2
    )
 Derivative Financial Instruments
 Contractual/December 31, 2009
    
    Notional
    
    Estimated Fair Value(In millions)
    
    Amount
    
    Asset
    
    (Liability)Without hedge designationCredit default swaps  purchased protection
    
    $
    116
    
    
    $
    -
    
    
    $
    (11
    )Credit default swaps  sold protection
    
    
    8
    
    
    
    -
    
    
    
    -Equity warrants
    
    
    2
    
    
    
    -
    
    
    
    -Total
    
    
    126
    
    
    
    -
    
    
    
    (11
    )Trading activitiesFutures sold, not yet purchased
    
    
    132
    
    
    
    -
    
    
    
    -Total
    
    $
    258
    
    
    $
    -
    
    
    $
    (11
    )
  86




---



##### Table of Contents



Note D. Fair Value
      87




---



##### Table of Contents



Assets and Liabilities Measured at Fair Value
   TotalAssets/(Liabilities)December 31, 2010
    
    Level 1
    
    Level 2
    
    Level 3
    
    at Fair Value(in millions)AssetsFixed maturity securities:U.S. Treasury securities and obligations of government agencies
    
    $
    76
    
    
    $
    61
    
    
    $
    -
    
    
    $
    137Asset-backed:Residential mortgage-backed
    
    
    -
    
    
    
    5,323
    
    
    
    767
    
    
    
    6,090Commercial mortgage-backed
    
    
    -
    
    
    
    920
    
    
    
    73
    
    
    
    993Other asset-backed
    
    
    -
    
    
    
    404
    
    
    
    359
    
    
    
    763Total asset-backed
    
    
    -
    
    
    
    6,647
    
    
    
    1,199
    
    
    
    7,846States, municipalities and political subdivisions
    
    
    -
    
    
    
    7,623
    
    
    
    266
    
    
    
    7,889Foreign government
    
    
    115
    
    
    
    505
    
    
    
    -
    
    
    
    620Corporate and other bonds
    
    
    -
    
    
    
    20,407
    
    
    
    624
    
    
    
    21,031Redeemable preferred stock
    
    
    3
    
    
    
    48
    
    
    
    3
    
    
    
    54Total fixed maturity securities
    
    
    194
    
    
    
    35,291
    
    
    
    2,092
    
    
    
    37,577Equity securities
    
    
    288
    
    
    
    126
    
    
    
    26
    
    
    
    440Derivative and other financial instruments, included in Other invested assets
    
    
    -
    
    
    
    -
    
    
    
    27
    
    
    
    27Short term investments
    
    
    1,214
    
    
    
    974
    
    
    
    27
    
    
    
    2,215Life settlement contracts, included in Other assets
    
    
    -
    
    
    
    -
    
    
    
    129
    
    
    
    129Discontinued operations investments, included in Other liabilities
    
    
    11
    
    
    
    60
    
    
    
    -
    
    
    
    71Separate account business
    
    
    28
    
    
    
    381
    
    
    
    41
    
    
    
    450Total assets
    
    $
    1,735
    
    
    $
    36,832
    
    
    $
    2,342
    
    
    $
    40,909LiabilitiesDerivative financial instruments, included in Other
liabilities
    
    $
    -
    
    
    $
    -
    
    
        $
    (2
    )
    
        $
    (2
    )Total liabilities
    
    $
    -
    
    
    $
    -
    
    
        $
    (2
    )
    
        $
    (2
    )
 88




---



##### Table of Contents



TotalAssets/(Liabilities)December 31, 2009
    
    Level 1
    
    Level 2
    
    Level 3
    
    at Fair Value(in millions)AssetsFixed maturity securities:U.S. Treasury securities and obligations of
government agencies
    
    $
    247
    
    
    $
    54
    
    
    $
    -
    
    
    $
    301Asset-backed:Residential mortgage-backed
    
    
    -
    
    
    
    6,308
    
    
    
    629
    
    
    
    6,937Commercial mortgage-backed
    
    
    -
    
    
    
    461
    
    
    
    123
    
    
    
    584Other asset-backed
    
    
    -
    
    
    
    484
    
    
    
    348
    
    
    
    832Total asset-backed
    
    
    -
    
    
    
    7,253
    
    
    
    1,100
    
    
    
    8,353States, municipalities and political subdivisions
    
    
    -
    
    
    
    6,424
    
    
    
    756
    
    
    
    7,180Foreign government
    
    
    139
    
    
    
    340
    
    
    
    -
    
    
    
    479Corporate and other bonds
    
    
    -
    
    
    
    18,636
    
    
    
    609
    
    
    
    19,245Redeemable preferred stock
    
    
    3
    
    
    
    49
    
    
    
    2
    
    
    
    54Total fixed maturity securities
    
    
    389
    
    
    
    32,756
    
    
    
    2,467
    
    
    
    35,612Equity securities
    
    
    503
    
    
    
    130
    
    
    
    11
    
    
    
    644Short term investments
    
    
    3,552
    
    
    
    397
    
    
    
    -
    
    
    
    3,949Life settlement contracts, included in Other assets
    
    
    -
    
    
    
    -
    
    
    
    130
    
    
    
    130Discontinued operations investments, included in Other liabilities
    
    
    19
    
    
    
    106
    
    
    
    16
    
    
    
    141Separate account business
    
    
    43
    
    
    
    342
    
    
    
    38
    
    
    
    423Total assets
    
    $
    4,506
    
    
    $
    33,731
    
    
    $
    2,662
    
    
    $
    40,899LiabilitiesDerivative financial instruments, included in Other liabilities
    
    $
    -
    
    
    $
    -
    
    
        $
    (11
    )
    
        $
    (11
    )Total liabilities
    
    $
    -
    
    
    $
    -
    
    
        $
    (11
    )
    
        $
    (11
    )
 89




---



##### Table of Contents



Net realizedinvestmentgains (losses)and net
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gainschange in
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (losses) on Levelunrealized
    
    appreciation
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    3 assets andappreciation
    
    (depreciation)
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    liabilities held at(depreciation)
    
    included in other
    
    issuances
    
    Transfers
    
    Transfers
    
    Balance at
    
    December 31,Balance at
    
    recognized in
    
    comprehensive
    
    and
    
    into
    
    out of
    
    December 31,
    
    2010 recognizedLevel 3
    
    January 1, 2010
    
    net income*
    
    income
    
    settlements
    
    Level 3
    
    Level 3
    
    2010
    
    in net income*(in millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    629
    
    
    $
    (10
    )
    
    $
    15
    
    
    $
    181
    
    
    $
    -
    
    
    $
    (48
    )
    
    $
    767
    
    
    $
    (13
    )Commercial mortgage-backed
    
    
    123
    
    
    
    10
    
    
    
    13
    
    
    
    (8
    )
    
    
    7
    
    
    
    (72
    )
    
    
    73
    
    
    
    (2
    )Other asset-backed
    
    
    348
    
    
    
    6
    
    
    
    30
    
    
    
    30
    
    
    
    -
    
    
    
    (55
    )
    
    
    359
    
    
    
    (1
    )Total asset-backed
    
    
    1,100
    
    
    
    6
    
    
    
    58
    
    
    
    203
    
    
    
    7
    
    
    
    (175
    )
    
    
    1,199
    
    
    
    (16
    )States, municipalities and political subdivisions
    
    
    756
    
    
    
    -
    
    
    
    15
    
    
    
    (507
    )
    
    
    2
    
    
    
    -
    
    
    
    266
    
    
    
    -Corporate and other bonds
    
    
    609
    
    
    
    9
    
    
    
    56
    
    
    
    45
    
    
    
    60
    
    
    
    (155
    )
    
    
    624
    
    
    
    (4
    )Redeemable preferred stock
    
    
    2
    
    
    
    6
    
    
    
    2
    
    
    
    (7
    )
    
    
    -
    
    
    
    -
    
    
    
    3
    
    
    
    -Total fixed maturity securities
    
    
    2,467
    
    
    
    21
    
    
    
    131
    
    
    
    (266
    )
    
    
    69
    
    
    
    (330
    )
    
    
    2,092
    
    
    
    (20
    )Equity securities
    
    
    11
    
    
    
    (4
    )
    
    
    1
    
    
    
    17
    
    
    
    8
    
    
    
    (7
    )
    
    
    26
    
    
    
    (5
    )Derivative and other financial instruments, net
    
    
    (11
    )
    
    
    (1
    )
    
    
    -
    
    
    
    37
    
    
    
    -
    
    
    
    -
    
    
    
    25
    
    
    
    (1
    )Short term investments
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    37
    
    
    
    1
    
    
    
    (11
    )
    
    
    27
    
    
    
    -Life settlement contracts
    
    
    130
    
    
    
    29
    
    
    
    -
    
    
    
    (30
    )
    
    
    -
    
    
    
    -
    
    
    
    129
    
    
    
    10Discontinued operations investments
    
    
    16
    
    
    
    -
    
    
    
    1
    
    
    
    (2
    )
    
    
    -
    
    
    
    (15
    )
    
    
    -
    
    
    
    -Separate account business
    
    
    38
    
    
    
    -
    
    
    
    -
    
    
    
    3
    
    
    
    -
    
    
    
    -
    
    
    
    41
    
    
    
    -Total
    
    $
    2,651
    
    
    $
    45
    
    
    $
    133
    
    
    $
    (204
    )
    
    $
    78
    
    
    $
    (363
    )
    
    $
    2,340
    
    
    $
    (16
    )
 90




---



##### Table of Contents



Net realizedinvestmentgains (losses)and net
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gainschange in
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (losses) on Levelunrealized
    
    appreciation
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    3 assets andappreciation
    
    (depreciation)
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    liabilities held at(depreciation)
    
    included in other
    
    issuances
    
    Transfers
    
    Transfers
    
    Balance at
    
    December 31,Balance at
    
    recognized in
    
    comprehensive
    
    and
    
    into
    
    out of
    
    December 31,
    
    2009 recognizedLevel 3
    
    January 1, 2009
    
    net income*
    
    income
    
    settlements
    
    Level 3
    
    Level 3
    
    2009
    
    in net income*(in millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    782
    
    
    $
    (32
    )
    
    $
    117
    
    
    $
    (52
    )
    
    $
    71
    
    
    $
    (257
    )
    
    $
    629
    
    
    $
    (12
    )Commercial mortgage-backed
    
    
    186
    
    
    
    (170
    )
    
    
    185
    
    
    
    (24
    )
    
    
    28
    
    
    
    (82
    )
    
    
    123
    
    
    
    (175
    )Other asset-backed
    
    
    139
    
    
    
    (26
    )
    
    
    56
    
    
    
    180
    
    
    
    153
    
    
    
    (154
    )
    
    
    348
    
    
    
    -Total asset-backed
    
    
    1,107
    
    
    
    (228
    )
    
    
    358
    
    
    
    104
    
    
    
    252
    
    
    
    (493
    )
    
    
    1,100
    
    
    
    (187
    )States, municipalities and political subdivisions
    
    
    750
    
    
    
    -
    
    
    
    72
    
    
    
    (66
    )
    
    
    -
    
    
    
    -
    
    
    
    756
    
    
    
    -Foreign government
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (6
    )
    
    
    -
    
    
    
    -Corporate and other bonds
    
    
    616
    
    
    
    (10
    )
    
    
    126
    
    
    
    75
    
    
    
    23
    
    
    
    (221
    )
    
    
    609
    
    
    
    (11
    )Redeemable preferred stock
    
    
    13
    
    
    
    (9
    )
    
    
    9
    
    
    
    7
    
    
    
    -
    
    
    
    (18
    )
    
    
    2
    
    
    
    (9
    )Total fixed maturity securities
    
    
    2,492
    
    
    
    (247
    )
    
    
    565
    
    
    
    120
    
    
    
    275
    
    
    
    (738
    )
    
    
    2,467
    
    
    
    (207
    )Equity securities
    
    
    210
    
    
    
    -
    
    
    
    (1
    )
    
    
    5
    
    
    
    -
    
    
    
    (203
    )
    
    
    11
    
    
    
    -Derivative financial instruments, net
    
    
    (87
    )
    
    
    14
    
    
    
    -
    
    
    
    62
    
    
    
    -
    
    
    
    -
    
    
    
    (11
    )
    
    
    (10
    )Short term investments
    
    
    -
    
    
    
    -
    
    
    
    1
    
    
    
    7
    
    
    
    -
    
    
    
    (8
    )
    
    
    -
    
    
    
    -Life settlement contracts
    
    
    129
    
    
    
    34
    
    
    
    -
    
    
    
    (33
    )
    
    
    -
    
    
    
    -
    
    
    
    130
    
    
    
    10Discontinued operations investments
    
    
    15
    
    
    
    (4
    )
    
    
    7
    
    
    
    (2
    )
    
    
    -
    
    
    
    -
    
    
    
    16
    
    
    
    -Separate account business
    
    
    38
    
    
    
    (1
    )
    
    
    5
    
    
    
    (1
    )
    
    
    -
    
    
    
    (3
    )
    
    
    38
    
    
    
    -Total
    
    $
    2,797
    
    
    $
    (204
    )
    
    $
    577
    
    
    $
    158
    
    
    $
    275
    
    
    $
    (952
    )
    
    $
    2,651
    
    
    $
    (207
    )
 91




---



##### Table of Contents



*Net realized and unrealized gains and losses shown above are recognized in Net income (loss)
as follows:
 
 Major Category of Assets and Liabilities
    
    Consolidated Statement of Operations Line ItemsFixed maturity securities available-for-sale
    
    Net realized investment gains (losses)Fixed maturity securities trading
    
    Net investment incomeEquity securities
    
    Net realized investment gains (losses)Derivative financial instruments held in a
trading portfolio
    
    Net investment incomeDerivative financial instruments not held
in a trading portfolio
and fair value option financial instruments
    
    Net realized investment gains (losses)Life settlement contracts
    
    Other revenues
   Fixed Maturity Securities
  Equity Securities
  Derivative and Other Financial Instruments
  92




---



##### Table of Contents



Short Term Investments
  Life Settlement Contracts
  Discontinued
Operations Investments
  Separate Account Business
  Financial Assets and Liabilities Not Measured at Fair Value
  Financial Assets and Liabilities
 December 31
    
    2010
    
    2009(In millions)
    
    Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial assetsNotes receivable for the issuance of common stock
    
    $
    26
    
    
    $
    26
    
    
    $
    30
    
    
    $
    29Mortgage loans
    
    
    87
    
    
    
    86
    
    
    
    -
    
    
    
    -Financial liabilitiesPremium deposits and annuity contracts
    
    $
    104
    
    
    $
    105
    
    
    $
    105
    
    
    $
    106Short term debt
    
    
    400
    
    
    
    411
    
    
    
    -
    
    
    
    -Long term debt
    
    
    2,251
    
    
    
    2,376
    
    
    
    2,303
    
    
    
    2,290
      93




---



##### Table of Contents



94




---



##### Table of Contents



Note E. Income Taxes
       Tax Reconciliation
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Income tax (expense) benefit at statutory rates
    
    $
    (389
    )
    
    $
    (189
    )
    
    $
    198Tax benefit from tax exempt income
    
    
    84
    
    
    
    119
    
    
    
    118Foreign taxes and credits
    
    
    (25
    )
    
    
    19
    
    
    
    (2
    )Other tax expense, including IRS settlements
    
    
    (3
    )
    
    
    (6
    )
    
    
    (3
    )Effective income tax (expense) benefit
    
    $
    (333
    )
    
    $
    (57
    )
    
    $
    311
  95




---



##### Table of Contents



Current and Deferred Taxes
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Current tax (expense) benefit
    
    $
    (6
    )
    
    $
    120
    
    
    $
    137Deferred tax (expense) benefit
    
    
    (327
    )
    
    
    (177
    )
    
    
    174Total income tax (expense) benefit
    
    $
    (333
    )
    
    $
    (57
    )
    
    $
    311
   Components of Net Deferred Tax Asset
 December 31
    
    2010
    
    2009(In millions)Deferred Tax Assets:Insurance reserves:Property and casualty claim and claim adjustment expense reserves
    
    $
    525
    
    
    $
    606Unearned premium reserves
    
    
    127
    
    
    
    111Receivables
    
    
    95
    
    
    
    185Employee benefits
    
    
    258
    
    
    
    279Life settlement contracts
    
    
    64
    
    
    
    72Investment valuation differences
    
    
    70
    
    
    
    316Net loss and tax credits carried forward
    
    
    84
    
    
    
    56Other assets
    
    
    124
    
    
    
    153Gross deferred tax assets
    
    
    1,347
    
    
    
    1,778Deferred Tax Liabilities:Deferred acquisition costs
    
    
    284
    
    
    
    297Net unrealized gains
    
    
    314
    
    
    
    5Other liabilities
    
    
    82
    
    
    
    143Gross deferred tax liabilities
    
    
    680
    
    
    
    445Net deferred tax asset
    
    $
    667
    
    
    $
    1,333
   96




---



##### Table of Contents



Note F. Claim and Claim Adjustment Expense Reserves
    97




---



##### Table of Contents



Reconciliation of Claim and Claim Adjustment Expense Reserves
 As of and for the years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Reserves, beginning of year:Gross
    
    $
    26,816
    
    
    $
    27,593
    
    
    $
    28,588Ceded
    
    
    5,594
    
    
    
    6,288
    
    
    
    7,056Net reserves, beginning of year
    
    
    21,222
    
    
    
    21,305
    
    
    
    21,532Reduction of net reserves due to the Loss Portfolio Transfer transaction
    
    
    (1,381
    )
    
    
    -
    
    
    
    -Reduction of net reserves due to sale of subsidiary
    
    
    (98
    )
    
    
    -
    
    
    
    -Net incurred claim and claim adjustment expenses:Provision for insured events of current year
    
    
    4,741
    
    
    
    4,793
    
    
    
    5,193Decrease in provision for insured events of prior years
    
    
    (544
    )
    
    
    (240
    )
    
    
    (5
    )Amortization of discount
    
    
    123
    
    
    
    122
    
    
    
    123Total net incurred (a)
    
    
    4,320
    
    
    
    4,675
    
    
    
    5,311Net payments attributable to:Current year events
    
    
    908
    
    
    
    917
    
    
    
    1,034Prior year events
    
    
    3,776
    
    
    
    3,939
    
    
    
    4,318Total net payments
    
    
    4,684
    
    
    
    4,856
    
    
    
    5,352Foreign currency translation adjustment
    
    
    (5
    )
    
    
    98
    
    
    
    (186
    )Net reserves, end of year
    
    
    19,374
    
    
    
    21,222
    
    
    
    21,305Ceded reserves, end of year
    
    
    6,122
    
    
    
    5,594
    
    
    
    6,288Gross reserves, end of year
    
    $
    25,496
    
    
    $
    26,816
    
    
    $
    27,593
 (a)
    
    Total net incurred above does not agree to Insurance claims and policyholders
benefits as reflected on the Consolidated Statements of Operations due to expenses incurred related
to uncollectible reinsurance and loss deductible receivables, and benefit expenses related to
future policy benefits and policyholders funds, which are not reflected in the table above.
  Reserve Development
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Core (Non-A&EP)
    
    $
    (545
    )
    
    $
    (396
    )
    
    $
    (117
    )A&EP
    
    
    -
    
    
    
    155
    
    
    
    110Property and casualty reserve development
    
    
    (545
    )
    
    
    (241
    )
    
    
    (7
    )Life reserve development in life company
    
    
    1
    
    
    
    1
    
    
    
    2Total
    
    $
    (544
    )
    
    $
    (240
    )
    
    $
    (5
    )
 98




---



##### Table of Contents



December 31, 2010
 Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 Life &
    
    CorporateCNA
    
    CNA
    
    Group
    
    & OtherSpecialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Total(In millions)Gross Case Reserves
    
    $
    2,341
    
    
    $
    6,390
    
    
    $
    2,403
    
    
    $
    1,430
    
    
    $
    12,564Gross IBNR Reserves
    
    
    4,452
    
    
    
    6,132
    
    
    
    336
    
    
    
    2,012
    
    
    
    12,932Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    6,793
    
    
    $
    12,522
    
    
    $
    2,739
    
    
    $
    3,442
    
    
    $
    25,496Net Case Reserves
    
    $
    1,992
    
    
    $
    5,349
    
    
    $
    1,831
    
    
    $
    461
    
    
    $
    9,633Net IBNR Reserves
    
    
    3,926
    
    
    
    5,292
    
    
    
    266
    
    
    
    257
    
    
    
    9,741Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    5,918
    
    
    $
    10,641
    
    
    $
    2,097
    
    
    $
    718
    
    
    $
    19,374
 December 31, 2009
 Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 Life &
    
    CorporateCNA
    
    CNA
    
    Group
    
    & OtherSpecialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Total(In millions)Gross Case Reserves
    
    $
    2,208
    
    
    $
    6,555
    
    
    $
    2,502
    
    
    $
    1,503
    
    
    $
    12,768Gross IBNR Reserves
    
    
    4,714
    
    
    
    6,688
    
    
    
    381
    
    
    
    2,265
    
    
    
    14,048Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    6,922
    
    
    $
    13,243
    
    
    $
    2,883
    
    
    $
    3,768
    
    
    $
    26,816Net Case Reserves
    
    $
    1,781
    
    
    $
    5,306
    
    
    $
    1,765
    
    
    $
    935
    
    
    $
    9,787Net IBNR Reserves
    
    
    4,085
    
    
    
    5,691
    
    
    
    255
    
    
    
    1,404
    
    
    
    11,435Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    5,866
    
    
    $
    10,997
    
    
    $
    2,020
    
    
    $
    2,339
    
    
    $
    21,222
 A&EP Reserves
    99




---



##### Table of Contents



Impact on Consolidated Statement of Operations
 2010(In millions)Other operating expenses
    
    $
    529Income tax benefit
    
    
    185Loss from continuing operations, included in the Corporate & Other Non-Core segment
    
    
    (344
    )Loss from discontinued operations
    
    
    (21
    )Net loss attributable to CNA
    
    $
    (365
    )
    Net Prior Year Development
   100




---



##### Table of Contents



2010 Net Prior Year Development
 Corporate(In millions)
    
    CNA
    
    
    CNA
    
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (341
    )
    
    $
    (304
    )
    
    $
    8
    
    
    $
    (637
    )A&EP
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Pretax (favorable) unfavorable net prior year development
before impact of premium development
    
    
    (341
    )
    
    
    (304
    )
    
    
    8
    
    
    
    (637
    )Pretax (favorable) unfavorable premium development
    
    
    (3
    )
    
    
    48
    
    
    
    (2
    )
    
    
    43Total pretax (favorable) unfavorable net prior year development
    
    $
    (344
    )
    
    $
    (256
    )
    
    $
    6
    
    
    $
    (594
    )
 2009 Net Prior Year Development
 Corporate(In millions)
    
    CNA
    
    
    CNA
    
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year
claim and allocated claim adjustment expense
reserve development:Core (Non-A&EP)
    
    $
    (218
    )
    
    $
    (230
    )
    
    $
    4
    
    
    $
    (444
    )A&EP
    
    
    -
    
    
    
    -
    
    
    
    155
    
    
    
    155Pretax (favorable) unfavorable net prior year
development before impact of premium development
    
    
    (218
    )
    
    
    (230
    )
    
    
    159
    
    
    
    (289
    )Pretax (favorable) unfavorable premium development
    
    
    (6
    )
    
    
    87
    
    
    
    -
    
    
    
    81Total pretax (favorable) unfavorable net prior
year development
    
    $
    (224
    )
    
    $
    (143
    )
    
    $
    159
    
    
    $
    (208
    )
 2008 Net Prior Year Development
 Corporate(In millions)
    
    CNA
    
    
    CNA
    
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (97
    )
    
    $
    (102
    )
    
    $
    14
    
    
    $
    (185
    )A&EP
    
    
    -
    
    
    
    -
    
    
    
    110
    
    
    
    110Pretax (favorable) unfavorable net prior year development
before impact of premium development
    
    
    (97
    )
    
    
    (102
    )
    
    
    124
    
    
    
    (75
    )Pretax (favorable) unfavorable premium development
    
    
    (9
    )
    
    
    5
    
    
    
    (1
    )
    
    
    (5
    )Total pretax (favorable) unfavorable net prior year development
    
    $
    (106
    )
    
    $
    (97
    )
    
    $
    123
    
    
    $
    (80
    )
 101




---



##### Table of Contents



CNA Specialty
  Years Ended December 31
    
    2010
    
    2009
    
    2008(In millions)Pretax (favorable) unfavorable
net prior year claim and
allocated claim adjustment
expense reserve development:Medical Professional Liability
    
    $
    (98
    )
    
    $
    (62
    )
    
    $
    (28
    )Other Professional Liability
    
    
    (129
    )
    
    
    (98
    )
    
    
    (3
    )Surety
    
    
    (103
    )
    
    
    (51
    )
    
    
    (36
    )Warranty
    
    
    -
    
    
    
    -
    
    
    
    (9
    )Other
    
    
    (11
    )
    
    
    (7
    )
    
    
    (21
    )Total pretax (favorable)
unfavorable net prior year claim
and allocated claim adjustment
expense reserve development
    
    $
    (341
    )
    
    $
    (218
    )
    
    $
    (97
    )
 2010
    2009
    2008
   102




---



##### Table of Contents



CNA Commercial
  Years Ended December 31
    
    2010
    
    2009
    
    2008(In millions)Pretax (favorable)
unfavorable net prior year
claim and allocated claim
adjustment expense reserve
development:Commercial Auto
    
    $
    (88
    )
    
    $
    (9
    )
    
    $
    21General Liability
    
    
    (59
    )
    
    
    (100
    )
    
    
    (444
    )Workers Compensation
    
    
    47
    
    
    
    69
    
    
    
    487Property and Other
    
    
    (204
    )
    
    
    (190
    )
    
    
    (166
    )Total pretax (favorable)
unfavorable net prior year
claim and allocated claim
adjustment expense reserve
development
    
    $
    (304
    )
    
    $
    (230
    )
    
    $
    (102
    )
 2010
      103




---



##### Table of Contents



2009
      2008
    104




---



##### Table of Contents



Corporate & Other Non-Core
 2009
   2008
  105




---



##### Table of Contents



Note G. Legal Proceedings and Contingent Liabilities
 Insurance Brokerage Antitrust Litigation
 In re Insurance Brokerage Antitrust Litigation
  Other Litigation
  106




---



##### Table of Contents



Note H. Reinsurance
   Components of Reinsurance Receivables
 December 31
    
    2010
    
    2009(In millions)Reinsurance receivables related to insurance reserves:Ceded claim and claim adjustment expenses
    
    $
    6,122
    
    
    $
    5,594Ceded future policy benefits
    
    
    822
    
    
    
    859Ceded policyholders funds
    
    
    37
    
    
    
    39Reinsurance receivables related to paid losses
    
    
    223
    
    
    
    440Reinsurance receivables
    
    
    7,204
    
    
    
    6,932Allowance for uncollectible reinsurance
    
    
    (125
    )
    
    
    (351
    )Reinsurance receivables, net of allowance for uncollectible reinsurance
    
    $
    7,079
    
    
    $
    6,581
    107




---



##### Table of Contents



Components of Earned Premiums
 Assumed/Direct
    
    Assumed
    
    Ceded
    
    Net
    
    Net %(In millions)2010 Earned PremiumsProperty and casualty
    
    $
    7,716
    
    
    $
    66
    
    
    $
    1,849
    
    
    $
    5,933
    
    
    
    1.1
    %Accident and health
    
    
    534
    
    
    
    49
    
    
    
    2
    
    
    
    581
    
    
    
    8.4Life
    
    
    60
    
    
    
    -
    
    
    
    59
    
    
    
    1
    
    
    
    -Total earned premiums
    
    $
    8,310
    
    
    $
    115
    
    
    $
    1,910
    
    
    $
    6,515
    
    
    
    1.8
    %2009 Earned PremiumsProperty and casualty
    
    $
    8,028
    
    
    $
    67
    
    
    $
    1,968
    
    
    $
    6,127
    
    
    
    1.1
    %Accident and health
    
    
    550
    
    
    
    51
    
    
    
    7
    
    
    
    594
    
    
    
    8.6Life
    
    
    84
    
    
    
    -
    
    
    
    84
    
    
    
    -
    
    
    
    -Total earned premiums
    
    $
    8,662
    
    
    $
    118
    
    
    $
    2,059
    
    
    $
    6,721
    
    
    
    1.8
    %2008 Earned PremiumsProperty and casualty
    
    $
    8,496
    
    
    $
    164
    
    
    $
    2,121
    
    
    $
    6,539
    
    
    
    2.5
    %Accident and health
    
    
    593
    
    
    
    46
    
    
    
    28
    
    
    
    611
    
    
    
    7.5Life
    
    
    99
    
    
    
    -
    
    
    
    98
    
    
    
    1
    
    
    
    -Total earned premiums
    
    $
    9,188
    
    
    $
    210
    
    
    $
    2,247
    
    
    $
    7,151
    
    
    
    2.9
    %
 Components of Written Premiums
 Assumed/Direct
    
    Assumed
    
    Ceded
    
    Net
    
    Net %(In millions)2010 Written PremiumsProperty and casualty
    
    $
    7,673
    
    
    $
    77
    
    
    $
    1,853
    
    
    $
    5,897
    
    
    
    1.3
    %Accident and health
    
    
    527
    
    
    
    48
    
    
    
    2
    
    
    
    573
    
    
    
    8.4Life
    
    
    60
    
    
    
    -
    
    
    
    59
    
    
    
    1
    
    
    
    -Total written premiums
    
    $
    8,260
    
    
    $
    125
    
    
    $
    1,914
    
    
    $
    6,471
    
    
    
    1.9
    %2009 Written PremiumsProperty and casualty
    
    $
    7,981
    
    
    $
    66
    
    
    $
    1,916
    
    
    $
    6,131
    
    
    
    1.1
    %Accident and health
    
    
    539
    
    
    
    50
    
    
    
    6
    
    
    
    583
    
    
    
    8.6Life
    
    
    83
    
    
    
    -
    
    
    
    83
    
    
    
    -
    
    
    
    -Total written premiums
    
    $
    8,603
    
    
    $
    116
    
    
    $
    2,005
    
    
    $
    6,714
    
    
    
    1.7
    %2008 Written PremiumsProperty and casualty
    
    $
    8,413
    
    
    $
    182
    
    
    $
    2,109
    
    
    $
    6,486
    
    
    
    2.8
    %Accident and health
    
    
    572
    
    
    
    51
    
    
    
    18
    
    
    
    605
    
    
    
    8.4Life
    
    
    70
    
    
    
    -
    
    
    
    69
    
    
    
    1
    
    
    
    -Total written premiums
    
    $
    9,055
    
    
    $
    233
    
    
    $
    2,196
    
    
    $
    7,092
    
    
    
    3.3
    %
    108




---



##### Table of Contents



Components of Life Insurance Inforce
 Direct
    
    Assumed
    
    Ceded
    
    Net(In millions)2010
    
    $
    8,015
    
    
    $
    -
    
    
    $
    8,001
    
    
    $
    142009
    
    $
    9,159
    
    
    $
    -
    
    
    $
    9,144
    
    
    $
    152008
    
    $
    10,805
    
    
    $
    -
    
    
    $
    10,790
    
    
    $
    15
  109




---



##### Table of Contents



Note I. Debt
  Debt
 December 31
    
    2010
    
    2009(In millions)Short-term debt:Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    $
    399
    
    
    $
    -Other debt, 6.53%, due in 2011
    
    
    1
    
    
    
    -Total short-term debt
    
    
    400
    
    
    
    -Long-term debt:Variable rate debt:Credit Facility  variable rate and term, due August 1, 2012
    
    
    -
    
    
    
    150Debenture  CNA Surety, face amount of $31, due April 29, 2034
    
    
    31
    
    
    
    31Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    
    -
    
    
    
    3998.375%, face amount of $70, due August 15, 2012
    
    
    69
    
    
    
    695.850%, face amount of $549, due December 15, 2014
    
    
    548
    
    
    
    5476.500%, face amount of $350, due August 15, 2016
    
    
    347
    
    
    
    3476.950%, face amount of $150, due January 15, 2018
    
    
    149
    
    
    
    1497.350%, face amount of $350, due November 15, 2019
    
    
    348
    
    
    
    3475.875%, face amount of $500, due August 15, 2020
    
    
    495
    
    
    
    -Debenture, 7.250%, face amount of $243, due November 15, 2023
    
    
    241
    
    
    
    241Other debt, 1.000%-6.530%, due through 2019
    
    
    23
    
    
    
    23Total long-term debt
    
    
    2,251
    
    
    
    2,303Total debt
    
    $
    2,651
    
    
    $
    2,303
     Maturity of Debt
 (In millions)2011
    
    $
    4002012
    
    
    702013
    
    
    -2014
    
    
    5492015
    
    
    1Thereafter
    
    
    1,646Less discount
    
    
    (15
    )Total
    
    $
    2,651
 110




---



##### Table of Contents



Note J. Benefit Plans
 Pension and Postretirement Health Care and Life Insurance Benefit Plans
      111




---



##### Table of Contents



Benefit Obligations and Accrued Benefit Costs
 Pension Benefits
    
    Postretirement Benefits2010
    
    2009
    
    2010
    
    2009(In millions)Benefit obligation at January 1
    
    $
    2,702
    
    
    $
    2,529
    
    
    $
    155
    
    
    $
    150Changes in benefit obligation:Service cost
    
    
    16
    
    
    
    17
    
    
    
    1
    
    
    
    1Interest cost
    
    
    149
    
    
    
    153
    
    
    
    7
    
    
    
    9Participants contributions
    
    
    -
    
    
    
    -
    
    
    
    6
    
    
    
    7Plan amendments
    
    
    -
    
    
    
    -
    
    
    
    (60
    )
    
    
    -Actuarial (gain) loss
    
    
    89
    
    
    
    153
    
    
    
    (2
    )
    
    
    5Benefits paid
    
    
    (157
    )
    
    
    (156
    )
    
    
    (13
    )
    
    
    (18
    )Foreign currency translation and other
    
    
    (1
    )
    
    
    6
    
    
    
    1
    
    
    
    1Benefit obligations at December 31
    
    
    2,798
    
    
    
    2,702
    
    
    
    95
    
    
    
    155Fair value of plan assets at January 1
    
    
    2,117
    
    
    
    1,884
    
    
    
    -
    
    
    
    -Change in plan assets:Actual return on plan assets
    
    
    234
    
    
    
    316
    
    
    
    -
    
    
    
    -Company contributions
    
    
    65
    
    
    
    67
    
    
    
    7
    
    
    
    11Participants contributions
    
    
    -
    
    
    
    -
    
    
    
    6
    
    
    
    7Benefits paid
    
    
    (157
    )
    
    
    (156
    )
    
    
    (13
    )
    
    
    (18
    )Foreign currency translation and other
    
    
    (1
    )
    
    
    6
    
    
    
    -
    
    
    
    -Fair value of plan assets at December 31
    
    
    2,258
    
    
    
    2,117
    
    
    
    -
    
    
    
    -Funded status
    
    $
    (540
    )
    
    $
    (585
    )
    
    $
    (95
    )
    
    $
    (155
    )Amounts recognized on the Consolidated
Balance Sheets at December 31:Other assets
    
    $
    7
    
    
    $
    2
    
    
    $
    -
    
    
    $
    -Other liabilities
    
    
    (547
    )
    
    
    (587
    )
    
    
    (95
    )
    
    
    (155
    )Net amount recognized
    
    $
    (540
    )
    
    $
    (585
    )
    
    $
    (95
    )
    
    $
    (155
    )Amounts recognized in Accumulated other
comprehensive income, not yet recognized
in net periodic cost (benefit):Prior service credit
    
    $
    -
    
    
    $
    (1
    )
    
    $
    (141
    )
    
    $
    (97
    )Net actuarial loss
    
    
    741
    
    
    
    748
    
    
    
    29
    
    
    
    32Net amount recognized
    
    $
    741
    
    
    $
    747
    
    
    $
    (112
    )
    
    $
    (65
    )
  112




---



##### Table of Contents



Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Pension benefitsService cost
    
    $
    16
    
    
    $
    17
    
    
    $
    20Interest cost on projected benefit obligation
    
    
    149
    
    
    
    153
    
    
    
    147Expected return on plan assets
    
    
    (162
    )
    
    
    (145
    )
    
    
    (180
    )Amortization of net actuarial loss
    
    
    24
    
    
    
    25
    
    
    
    4Net periodic pension cost (benefit)
    
    $
    27
    
    
    $
    50
    
    
    $
    (9
    )Postretirement benefitsService cost
    
    $
    1
    
    
    $
    1
    
    
    $
    1Interest cost on projected benefit obligation
    
    
    7
    
    
    
    9
    
    
    
    9Amortization of prior service credit
    
    
    (16
    )
    
    
    (16
    )
    
    
    (16
    )Amortization of net actuarial loss
    
    
    1
    
    
    
    1
    
    
    
    1Net periodic postretirement benefit
    
    $
    (7
    )
    
    $
    (5
    )
    
    $
    (5
    )
  Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Pension and postretirement benefitsAmounts arising during the period
    
    $
    44
    
    
    $
    13
    
    
    $
    (546
    )Reclassification adjustment relating to prior service credit
    
    
    (16
    )
    
    
    (16
    )
    
    
    (16
    )Reclassification adjustment relating to actuarial loss
    
    
    25
    
    
    
    26
    
    
    
    5Total increase (decrease) in Other comprehensive income
    
    $
    53
    
    
    $
    23
    
    
    $
    (557
    )
  Pension
    
    Postretirement(In millions)
    
    Benefits
    
    BenefitsAmortization of prior service credit
    
    $
    -
    
    
    $
    (19
    )Amortization of net actuarial loss
    
    
    26
    
    
    
    1Total estimated amounts to be recognized
    
    $
    26
    
    
    $
    (18
    )
 113




---



##### Table of Contents



Actuarial Assumptions for Benefit Obligations
 December 31
    
    2010
    
    2009Pension benefitsDiscount rate
    
    
    5.375
    %
    
    
    5.700
    %Expected long term rate of return
    
    
    8.000
    
    
    
    8.000Rate of compensation increases
    
    
    5.030
    
    
    
    5.030Postretirement benefitsDiscount rate
    
    
    4.375
    %
    
    
    5.500
    %
  Actuarial Assumptions for Net Cost or Benefit
 Years ended December 31
    
    2010
    
    2009
    
    2008Pension benefitsDiscount rate
    
    
    5.700
    %
    
    
    6.300
    %
    
    
    6.000
    %Expected long term rate of return
    
    
    8.000
    
    
    
    8.000
    
    
    
    8.000Rate of compensation increases
    
    
    5.030
    
    
    
    5.830
    
    
    
    5.830Postretirement benefitsDiscount rate
    
    
    4.875% / 5.500
    %
    
    
    6.300
    %
    
    
    5.875
    %
     114




---



##### Table of Contents



Total assets at fairDecember 31, 2010
    
    Level 1
    
    Level 2
    
    Level 3
    
    value(In millions)AssetsFixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    -
    
    
    $
    179
    
    
    $
    -
    
    
    $
    179Commercial mortgage-backed
    
    
    -
    
    
    
    40
    
    
    
    9
    
    
    
    49Other asset-backed
    
    
    -
    
    
    
    9
    
    
    
    1
    
    
    
    10Total asset-backed
    
    
    -
    
    
    
    228
    
    
    
    10
    
    
    
    238Corporate and other bonds
    
    
    -
    
    
    
    305
    
    
    
    10
    
    
    
    315States, municipalities and political
subdivisions
    
    
    -
    
    
    
    92
    
    
    
    -
    
    
    
    92Total fixed maturity securities
    
    
    -
    
    
    
    625
    
    
    
    20
    
    
    
    645Equity securities
    
    
    421
    
    
    
    77
    
    
    
    6
    
    
    
    504Short term investments
    
    
    106
    
    
    
    7
    
    
    
    -
    
    
    
    113Limited partnerships:Hedge funds
    
    
    -
    
    
    
    518
    
    
    
    394
    
    
    
    912Private equity
    
    
    -
    
    
    
    -
    
    
    
    59
    
    
    
    59Derivatives
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    1Other assets
    
    
    -
    
    
    
    15
    
    
    
    -
    
    
    
    15Investment contracts with insurance company
    
    
    -
    
    
    
    -
    
    
    
    9
    
    
    
    9Total assets
    
    $
    528
    
    
    $
    1,242
    
    
    $
    488
    
    
    $
    2,258
 Total assets at fairDecember 31, 2009
    
    Level 1
    
    Level 2
    
    Level 3
    
    value(In millions)AssetsFixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    -
    
    
    $
    197
    
    
    $
    52
    
    
    $
    249Other asset-backed
    
    
    -
    
    
    
    11
    
    
    
    5
    
    
    
    16Total asset-backed
    
    
    -
    
    
    
    208
    
    
    
    57
    
    
    
    265Corporate and other bonds
    
    
    17
    
    
    
    291
    
    
    
    -
    
    
    
    308States, municipalities and political
subdivisions
    
    
    -
    
    
    
    71
    
    
    
    -
    
    
    
    71Total fixed maturity securities
    
    
    17
    
    
    
    570
    
    
    
    57
    
    
    
    644Equity securities
    
    
    339
    
    
    
    54
    
    
    
    5
    
    
    
    398Short term investments
    
    
    202
    
    
    
    -
    
    
    
    -
    
    
    
    202Limited partnerships:Hedge funds
    
    
    -
    
    
    
    466
    
    
    
    339
    
    
    
    805Private equity
    
    
    -
    
    
    
    -
    
    
    
    57
    
    
    
    57Derivatives
    
    
    2
    
    
    
    -
    
    
    
    -
    
    
    
    2Investment contracts with insurance company
    
    
    -
    
    
    
    -
    
    
    
    9
    
    
    
    9Total assets
    
    $
    560
    
    
    $
    1,090
    
    
    $
    467
    
    
    $
    2,117
  115




---



##### Table of Contents



Actual returnActual return
    
    on assets soldon assets still
    
    during theBalance at
    
    held at
    
    year ended
    
    Purchases,
    
    Net transfers
    
    Balance atLevel 3
    
    January 1,
    
    December 31,
    
    December 31,
    
    sales, and
    
    into (out of)
    
    December 31,(In millions)
    
    2010
    
    2010
    
    2010
    
    settlements
    
    Level 3
    
    2010Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    52
    
    
    $
    -
    
    
    $
    6
    
    
    $
    (58
    )
    
    $
    -
    
    
    $
    -Commercial mortgage-backed
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9
    
    
    
    -
    
    
    
    9Other asset-backed
    
    
    5
    
    
    
    -
    
    
    
    -
    
    
    
    (4
    )
    
    
    -
    
    
    
    1Total asset-backed
    
    
    57
    
    
    
    -
    
    
    
    6
    
    
    
    (53
    )
    
    
    -
    
    
    
    10Corporate and other bonds
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10
    
    
    
    -
    
    
    
    10Total fixed maturity securities
    
    
    57
    
    
    
    -
    
    
    
    6
    
    
    
    (43
    )
    
    
    -
    
    
    
    20Equity securities
    
    
    5
    
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    6Limited partnerships:Hedge funds
    
    
    339
    
    
    
    64
    
    
    
    -
    
    
    
    (9
    )
    
    
    -
    
    
    
    394Private equity
    
    
    57
    
    
    
    6
    
    
    
    -
    
    
    
    (4
    )
    
    
    -
    
    
    
    59Investment contracts with
insurance company
    
    
    9
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9Total
    
    $
    467
    
    
    $
    71
    
    
    $
    6
    
    
    $
    (56
    )
    
    $
    -
    
    
    $
    488
 Actual returnActual return
    
    on assets soldon assets still
    
    during theBalance at
    
    held at
    
    year ended
    
    Purchases,
    
    Net transfers
    
    Balance atLevel 3
    
    January 1,
    
    December 31,
    
    December 31,
    
    sales, and
    
    into (out of)
    
    December 31,(In millions)
    
    2009
    
    2009
    
    2009
    
    settlements
    
    Level 3
    
    2009Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    54
    
    
    $
    -
    
    
    $
    9
    
    
    $
    (11
    )
    
    $
    -
    
    
    $
    52Other asset-backed
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    5
    
    
    
    -
    
    
    
    5Total asset-backed
    
    
    54
    
    
    
    -
    
    
    
    9
    
    
    
    (6
    )
    
    
    -
    
    
    
    57Equity securities
    
    
    2
    
    
    
    -
    
    
    
    -
    
    
    
    5
    
    
    
    (2
    )
    
    
    5Limited partnerships:Hedge funds
    
    
    569
    
    
    
    174
    
    
    
    -
    
    
    
    62
    
    
    
    (466
    )
    
    
    339Private equity
    
    
    59
    
    
    
    (5
    )
    
    
    -
    
    
    
    3
    
    
    
    -
    
    
    
    57Investment contracts with
insurance company
    
    
    8
    
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9Total
    
    $
    692
    
    
    $
    170
    
    
    $
    9
    
    
    $
    64
    
    
    $
    (468
    )
    
    $
    467
 116




---



##### Table of Contents



Estimated Future Minimum Benefit Payments to Participants
 Pension
    
    PostretirementBenefits
    
    Benefits(In millions)2011
    
    $
    175
    
    
    $
    102012
    
    
    177
    
    
    
    82013
    
    
    182
    
    
    
    82014
    
    
    185
    
    
    
    82015
    
    
    191
    
    
    
    82016-2020
    
    
    1,001
    
    
    
    37
  Savings Plans
     Stock-Based Compensation
   117




---



##### Table of Contents



Stock Options and SARs
    Years ended December 31
    
    2010
    
    2009
    
    2008Weighted average expected life of the securities granted
    
    5.61 years
    
    4.84 years
    
    4.54 yearsEstimate of the underlying common stocks volatility
    
    
    39.58
    %
    
    
    39.95
    %
    
    
    24.82
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    1.4
    %Risk free interest rate
    
    
    2.6
    %
    
    
    2.0
    %
    
    
    2.8
    %
  Weighted-Average
    
    
    
    
    
    Weighted-AverageNumber
    
    Exercise Price
    
    Aggregate
    
    Remainingof Awards
    
    per Award
    
    Intrinsic Value
    
    Contractual TermOutstanding at January 1, 2010
    
    
    1,902,700
    
    
    $
    27.76Awards granted
    
    
    120,000
    
    
    
    25.75Awards exercised
    
    
    (147,625
    )
    
    
    25.16Awards forfeited, cancelled or expired
    
    
    (249,900
    )
    
    
    30.53Outstanding at December 31, 2010
    
    
    1,625,175
    
    
    $
    27.42
    
    
    $5 million
    
    5.07 yearsOutstanding, fully vested and
expected to vest
    
    
    1,543,735
    
    
    $
    27.80
    
    
    $5 million
    
    4.89 yearsOutstanding, exercisable
    
    
    1,089,900
    
    
    $
    30.20
    
    
    $1 million
    
    3.60 years
  Years ended December 31
    
    2010
    
    2009
    
    2008Weighted-average grant date fair value
    
    $
    10.49
    
    
    $
    4.69
    
    
    $
    5.45Total intrinsic value of awards exercised
    
    $
    350 thousand
    
    
    $
    -
    
    
    $
    10 thousandFair value of awards vested
    
    $
    2 million
    
    
    $
    4 million
    
    
    $
    3 million
 118




---



##### Table of Contents



Share Awards
   2010Weighted-
AverageNumber
of Awards
    
    Grant date 
Fair valueBalance at January 1
    
    
    341,957
    
    
    $
    13.63Performance-based adjustment
    
    
    (41,632
    )
    
    
    11.51Awards granted
    
    
    274,732
    
    
    
    25.72Awards vested
    
    
    (77,581
    )
    
    
    14.56Awards forfeited, cancelled or expired
    
    
    (3,969
    )
    
    
    25.56Balance at December 31
    
    
    493,507
    
    
    $
    20.30
 119




---



##### Table of Contents



Note K. Operating Leases, Commitments and Contingencies, and Guarantees
 Operating Leases
   Future Minimum Lease Payments and Sublease Receipts
 Future
    
    FutureMinimum
    
    MinimumLease
    
    SubleasePayments
    
    Receipts(In millions)2011
    
    $
    38
    
    
    $
    22012
    
    
    34
    
    
    
    22013
    
    
    31
    
    
    
    22014
    
    
    22
    
    
    
    -2015
    
    
    18
    
    
    
    -Thereafter
    
    
    25
    
    
    
    -Total
    
    $
    168
    
    
    $
    6
  Commitments and Contingencies
    Guarantees
  120




---



##### Table of Contents



121




---



##### Table of Contents



Note L. Stockholders Equity and Statutory Accounting Practices
 2008 Senior Preferred
   Common Stock Dividends
  Share Repurchases
  Statutory Accounting Practices (Unaudited)
     122




---



##### Table of Contents



Statutory Information
 Statutory Capital and Surplus
    
    Statutory Net Income (Loss)December 31
    
    Years Ended December 312010 (b)
    
    2009
    
    2010 (b)
    
    2009
    
    2008(In millions)Combined Continental
Casualty Companies (a)
    
    $
    9,821
    
    
    $
    9,338
    
    
    $
    258
    
    
    $
    17
    
    
    $
    (172
    )Life company
    
    
    498
    
    
    
    448
    
    
    
    86
    
    
    
    (65
    )
    
    
    (51
    )
 
 (a)
    
    Represents the combined statutory surplus of CCC and its subsidiaries, including the Life
company.(b)
    
    Preliminary. 123




---



##### Table of Contents



Note M. Accumulated Other Comprehensive Income (Loss)
  Accumulated Other Comprehensive Income (Loss)
 December 31
    
    2010
    
    2009(In millions)
    
    Tax
    
    After-tax
    
    Tax
    
    After-taxCumulative foreign currency translation adjustment
    
    $
    -
    
    
    $
    136
    
    
    $
    -
    
    
    $
    87Pension and postretirement benefits
    
    
    220
    
    
    
    (409
    )
    
    
    238
    
    
    
    (444
    )Net unrealized losses on investments with OTTI losses
    
    
    39
    
    
    
    (73
    )
    
    
    86
    
    
    
    (159
    )Net unrealized gains on other investments
    
    
    (348
    )
    
    
    691
    
    
    
    (76
    )
    
    
    198Accumulated other comprehensive (income) loss
attributable to noncontrolling interests
    
    
    -
    
    
    
    (19
    )
    
    
    -
    
    
    
    (7
    )Accumulated other comprehensive income (loss)
    
    $
    (89
    )
    
    $
    326
    
    
    $
    248
    
    
    $
    (325
    )
  124




---



##### Table of Contents



Note N. Business Segments
         125




---



##### Table of Contents



126




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2010
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,691
    
    
    $
    3,208
    
    
    $
    573
    
    
    $
    2
    
    
    $
    (3
    )
    
    $
    6,471RevenuesNet earned premiums
    
    $
    2,679
    
    
    $
    3,256
    
    
    $
    582
    
    
    $
    1
    
    
    $
    (3
    )
    
    $
    6,515Net investment income
    
    
    591
    
    
    
    873
    
    
    
    715
    
    
    
    137
    
    
    
    -
    
    
    
    2,316Other revenues
    
    
    216
    
    
    
    61
    
    
    
    7
    
    
    
    8
    
    
    
    -
    
    
    
    292Total operating revenues
    
    
    3,486
    
    
    
    4,190
    
    
    
    1,304
    
    
    
    146
    
    
    
    (3
    )
    
    
    9,123Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,447
    
    
    
    2,175
    
    
    
    1,275
    
    
    
    58
    
    
    
    -
    
    
    
    4,955Policyholders dividends
    
    
    12
    
    
    
    14
    
    
    
    4
    
    
    
    -
    
    
    
    -
    
    
    
    30Amortization of deferred acquisition costs
    
    
    631
    
    
    
    736
    
    
    
    20
    
    
    
    -
    
    
    
    -
    
    
    
    1,387Other insurance related expenses
    
    
    186
    
    
    
    424
    
    
    
    180
    
    
    
    10
    
    
    
    (3
    )
    
    
    797Other expenses
    
    
    190
    
    
    
    55
    
    
    
    2
    
    
    
    681
    
    
    
    -
    
    
    
    928Total claims, benefits and expenses
    
    
    2,466
    
    
    
    3,404
    
    
    
    1,481
    
    
    
    749
    
    
    
    (3
    )
    
    
    8,097Operating income (loss) from continuing operations before
income tax
    
    
    1,020
    
    
    
    786
    
    
    
    (177
    )
    
    
    (603
    )
    
    
    -
    
    
    
    1,026Income tax (expense) benefit on operating income (loss)
    
    
    (343
    )
    
    
    (260
    )
    
    
    90
    
    
    
    216
    
    
    
    -
    
    
    
    (297
    )Net operating (income) loss, after-tax, attributable to
noncontrolling interests
    
    
    (52
    )
    
    
    (17
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (69
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    625
    
    
    
    509
    
    
    
    (87
    )
    
    
    (387
    )
    
    
    -
    
    
    
    660Net realized investment gains (losses), net of
participating policyholders interests
    
    
    30
    
    
    
    (15
    )
    
    
    53
    
    
    
    18
    
    
    
    -
    
    
    
    86Income tax expense on net realized investment gains (losses)
    
    
    (10
    )
    
    
    (1
    )
    
    
    (20
    )
    
    
    (5
    )
    
    
    -
    
    
    
    (36
    )Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    -
    
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1Net realized investment gains (losses) attributable to CNA
    
    
    20
    
    
    
    (15
    )
    
    
    33
    
    
    
    13
    
    
    
    -
    
    
    
    51Net income (loss) from continuing operations attributable
to CNA
    
    $
    645
    
    
    $
    494
    
    
    $
    (54
    )
    
    $
    (374
    )
    
    $
    -
    
    
    $
    711(a) Net written premiums relate to business in property and casualty companies only.December 31, 2010(In millions)Reinsurance receivables
    
    $
    906
    
    
    $
    1,973
    
    
    $
    1,502
    
    
    $
    2,823
    
    
    $
    -
    
    
    $
    7,204Insurance receivables
    
    $
    654
    
    
    $
    1,050
    
    
    $
    9
    
    
    $
    4
    
    
    $
    -
    
    
    $
    1,717Deferred acquisition costs
    
    $
    330
    
    
    $
    315
    
    
    $
    434
    
    
    $
    -
    
    
    $
    -
    
    
    $
    1,079Insurance reservesClaim and claim adjustment expenses
    
    $
    6,793
    
    
    $
    12,522
    
    
    $
    2,739
    
    
    $
    3,442
    
    
    $
    -
    
    
    $
    25,496Unearned premiums
    
    
    1,543
    
    
    
    1,526
    
    
    
    132
    
    
    
    2
    
    
    
    -
    
    
    
    3,203Future policy benefits
    
    
    -
    
    
    
    -
    
    
    
    8,718
    
    
    
    -
    
    
    
    -
    
    
    
    8,718Policyholders funds
    
    
    16
    
    
    
    13
    
    
    
    144
    
    
    
    -
    
    
    
    -
    
    
    
    173
 127




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2009
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,684
    
    
    $
    3,448
    
    
    $
    583
    
    
    $
    1
    
    
    $
    (3
    )
    
    $
    6,713RevenuesNet earned premiums
    
    $
    2,697
    
    
    $
    3,432
    
    
    $
    595
    
    
    $
    -
    
    
    $
    (3
    )
    
    $
    6,721Net investment income
    
    
    526
    
    
    
    935
    
    
    
    664
    
    
    
    195
    
    
    
    -
    
    
    
    2,320Other revenues
    
    
    206
    
    
    
    61
    
    
    
    11
    
    
    
    10
    
    
    
    -
    
    
    
    288Total operating revenues
    
    
    3,429
    
    
    
    4,428
    
    
    
    1,270
    
    
    
    205
    
    
    
    (3
    )
    
    
    9,329Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,536
    
    
    
    2,420
    
    
    
    1,084
    
    
    
    227
    
    
    
    -
    
    
    
    5,267Policyholders dividends
    
    
    9
    
    
    
    9
    
    
    
    5
    
    
    
    -
    
    
    
    -
    
    
    
    23Amortization of deferred acquisition costs
    
    
    624
    
    
    
    775
    
    
    
    18
    
    
    
    -
    
    
    
    -
    
    
    
    1,417Other insurance related expenses
    
    
    163
    
    
    
    435
    
    
    
    183
    
    
    
    3
    
    
    
    (3
    )
    
    
    781Other expenses
    
    
    179
    
    
    
    77
    
    
    
    69
    
    
    
    119
    
    
    
    -
    
    
    
    444Total claims, benefits and expenses
    
    
    2,511
    
    
    
    3,716
    
    
    
    1,359
    
    
    
    349
    
    
    
    (3
    )
    
    
    7,932Operating income (loss) from continuing operations
before income tax
    
    
    918
    
    
    
    712
    
    
    
    (89
    )
    
    
    (144
    )
    
    
    -
    
    
    
    1,397Income tax (expense) benefit on operating income (loss)
    
    
    (282
    )
    
    
    (201
    )
    
    
    73
    
    
    
    57
    
    
    
    -
    
    
    
    (353
    )Net operating (income) loss, after-tax, attributable
to noncontrolling interests
    
    
    (45
    )
    
    
    (17
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (62
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    591
    
    
    
    494
    
    
    
    (16
    )
    
    
    (87
    )
    
    
    -
    
    
    
    982Net realized investment losses, net of participating
policyholders interests
    
    
    (186
    )
    
    
    (360
    )
    
    
    (235
    )
    
    
    (76
    )
    
    
    -
    
    
    
    (857
    )Income tax benefit on net realized investment losses
    
    
    64
    
    
    
    123
    
    
    
    82
    
    
    
    27
    
    
    
    -
    
    
    
    296Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    (1
    )
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (123
    )
    
    
    (236
    )
    
    
    (153
    )
    
    
    (49
    )
    
    
    -
    
    
    
    (561
    )Net income (loss) from continuing operations
attributable to CNA
    
    $
    468
    
    
    $
    258
    
    
    $
    (169
    )
    
    $
    (136
    )
    
    $
    -
    
    
    $
    421(a) Net written premiums relate to business in property and casualty companies only.December 31, 2009(In millions)Reinsurance receivables
    
    $
    1,077
    
    
    $
    2,324
    
    
    $
    1,744
    
    
    $
    1,787
    
    
    $
    -
    
    
    $
    6,932Insurance receivables
    
    $
    613
    
    
    $
    1,234
    
    
    $
    9
    
    
    $
    2
    
    
    $
    -
    
    
    $
    1,858Deferred acquisition costs
    
    $
    318
    
    
    $
    336
    
    
    $
    454
    
    
    $
    -
    
    
    $
    -
    
    
    $
    1,108Insurance reservesClaim and claim adjustment expenses
    
    $
    6,922
    
    
    $
    13,243
    
    
    $
    2,883
    
    
    $
    3,768
    
    
    $
    -
    
    
    $
    26,816Unearned premiums
    
    
    1,528
    
    
    
    1,603
    
    
    
    140
    
    
    
    3
    
    
    
    -
    
    
    
    3,274Future policy benefits
    
    
    -
    
    
    
    -
    
    
    
    7,981
    
    
    
    -
    
    
    
    -
    
    
    
    7,981Policyholders funds
    
    
    11
    
    
    
    11
    
    
    
    170
    
    
    
    -
    
    
    
    -
    
    
    
    192
 128




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2008
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,719
    
    
    $
    3,770
    
    
    $
    604
    
    
    $
    1
    
    
    $
    (4
    )
    
    $
    7,090RevenuesNet earned premiums
    
    $
    2,755
    
    
    $
    3,787
    
    
    $
    612
    
    
    $
    1
    
    
    $
    (4
    )
    
    $
    7,151Net investment income
    
    
    354
    
    
    
    612
    
    
    
    484
    
    
    
    169
    
    
    
    -
    
    
    
    1,619Other revenues
    
    
    219
    
    
    
    65
    
    
    
    28
    
    
    
    14
    
    
    
    -
    
    
    
    326Total operating revenues
    
    
    3,328
    
    
    
    4,464
    
    
    
    1,124
    
    
    
    184
    
    
    
    (4
    )
    
    
    9,096Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,700
    
    
    
    2,772
    
    
    
    1,104
    
    
    
    127
    
    
    
    -
    
    
    
    5,703Policyholders dividends
    
    
    13
    
    
    
    1
    
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    20Amortization of deferred acquisition costs
    
    
    618
    
    
    
    836
    
    
    
    13
    
    
    
    -
    
    
    
    -
    
    
    
    1,467Other insurance related expenses
    
    
    137
    
    
    
    343
    
    
    
    201
    
    
    
    17
    
    
    
    (4
    )
    
    
    694Other expenses
    
    
    198
    
    
    
    105
    
    
    
    24
    
    
    
    150
    
    
    
    -
    
    
    
    477Total claims, benefits and expenses
    
    
    2,666
    
    
    
    4,057
    
    
    
    1,348
    
    
    
    294
    
    
    
    (4
    )
    
    
    8,361Operating income (loss) from continuing operations
before income tax
    
    
    662
    
    
    
    407
    
    
    
    (224
    )
    
    
    (110
    )
    
    
    -
    
    
    
    735Income tax (expense) benefit on operating income (loss)
    
    
    (205
    )
    
    
    (101
    )
    
    
    116
    
    
    
    45
    
    
    
    -
    
    
    
    (145
    )Net operating (income) loss, after-tax, attributable
to noncontrolling interests
    
    
    (43
    )
    
    
    (14
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (57
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    414
    
    
    
    292
    
    
    
    (108
    )
    
    
    (65
    )
    
    
    -
    
    
    
    533Net realized investment losses, net of participating
policyholders interests
    
    
    (257
    )
    
    
    (526
    )
    
    
    (363
    )
    
    
    (151
    )
    
    
    -
    
    
    
    (1,297
    )Income tax benefit on net realized investment losses
    
    
    90
    
    
    
    185
    
    
    
    127
    
    
    
    54
    
    
    
    -
    
    
    
    456Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (167
    )
    
    
    (341
    )
    
    
    (236
    )
    
    
    (97
    )
    
    
    -
    
    
    
    (841
    )Net income (loss) from continuing operations
attributable to CNA
    
    $
    247
    
    
    $
    (49
    )
    
    $
    (344
    )
    
    $
    (162
    )
    
    $
    -
    
    
    $
    (308
    )(a) Net written premiums relate to business in property and casualty companies only.
 129




---



##### Table of Contents



Revenues by Line of BusinessYears ended December 31
    
    2010
    
    2009
    
    2008(In millions)CNA SpecialtyInternational
    
    $
    199
    
    
    $
    171
    
    
    $
    163Professional & Management Liability
    
    
    2,551
    
    
    
    2,339
    
    
    
    2,140Surety
    
    
    475
    
    
    
    474
    
    
    
    479Warranty and Alternative Risks
    
    
    291
    
    
    
    259
    
    
    
    289CNA Specialty revenues
    
    
    3,516
    
    
    
    3,243
    
    
    
    3,071CNA CommercialBusiness Insurance
    
    
    564
    
    
    
    549
    
    
    
    573CNA Select Risk
    
    
    261
    
    
    
    210
    
    
    
    179Commercial Insurance
    
    
    2,851
    
    
    
    2,692
    
    
    
    2,521International
    
    
    499
    
    
    
    617
    
    
    
    665CNA Commercial revenues
    
    
    4,175
    
    
    
    4,068
    
    
    
    3,938Life & Group Non-CoreHealth
    
    
    1,100
    
    
    
    811
    
    
    
    688Life & Annuity
    
    
    249
    
    
    
    211
    
    
    
    40Other
    
    
    8
    
    
    
    13
    
    
    
    33Life & Group Non-Core revenues
    
    
    1,357
    
    
    
    1,035
    
    
    
    761Corporate & Other Non-Core revenues
    
    
    164
    
    
    
    129
    
    
    
    33Eliminations
    
    
    (3
    )
    
    
    (3
    )
    
    
    (4
    )Total revenues
    
    $
    9,209
    
    
    $
    8,472
    
    
    $
    7,799
 130




---



##### Table of Contents



Note O. IT Transformation
   IT Transformation Costs by Segment
 Year ended December 31
    
    2010(In millions)CNA Specialty
    
    $
    8CNA Commercial
    
    
    15Life & Group Non-Core
    
    
    10Corporate & Other Non-Core
    
    
    3Total IT Transformation Costs
    
    $
    36
 131




---



##### Table of Contents



Note P. Discontinued Operations
   Discontinued Operations
 Years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Revenues:Net investment income
    
    $
    6
    
    
    $
    6
    
    
    $
    8Net realized investment gains (losses) and other
    
    
    (1
    )
    
    
    -
    
    
    
    2Total revenues
    
    
    5
    
    
    
    6
    
    
    
    10Insurance related expenses
    
    
    26
    
    
    
    8
    
    
    
    10Income (loss) before income taxes
    
    
    (21
    )
    
    
    (2
    )
    
    
    -Income tax (expense) benefit
    
    
    -
    
    
    
    -
    
    
    
    9Income (loss) from discontinued operations, net of tax
    
    $
    (21
    )
    
    $
    (2
    )
    
    $
    9
  Discontinued Operations
 December 31
    
    2010
    
    2009(In millions)Assets:Investments
    
    $
    71
    
    
    $
    141Reinsurance receivables
    
    
    47
    
    
    
    4Cash
    
    
    -
    
    
    
    -Other assets
    
    
    13
    
    
    
    2Total assets
    
    
    131
    
    
    
    147Liabilities:Insurance reserves
    
    
    120
    
    
    
    140Other liabilities
    
    
    13
    
    
    
    8Total liabilities
    
    
    133
    
    
    
    148Net liabilities of discontinued operations
    
    $
    (2
    )
    
    $
    (1
    )
  132




---



##### Table of Contents



Note Q. Quarterly Financial Data (Unaudited)
  Quarterly Financial Data
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FullFirst
    
    Second
    
    Third
    
    Fourth
    
    Year(In millions, except per share data)2010Revenues
    
    $
    2,315
    
    
    $
    2,233
    
    
    $
    2,363
    
    
    $
    2,298
    
    
    $
    9,209Income (loss) from continuing operations,
net of tax
    
    
    255
    
    
    
    301
    
    
    
    (103
    )
    
    
    326
    
    
    
    779Income (loss) from discontinued operations,
net of tax
    
    
    -
    
    
    
    1
    
    
    
    (22
    )
    
    
    -
    
    
    
    (21
    )Net (income) loss attributable to
noncontrolling interests, net of tax
    
    
    (10
    )
    
    
    (19
    )
    
    
    (15
    )
    
    
    (24
    )
    
    
    (68
    )Net income (loss) attributable to CNA
    
    $
    245
    
    
    $
    283
    
    
    $
    (140
    )
    
    $
    302
    
    
    $
    690Basic and Diluted Earnings (Loss) Per ShareIncome (loss) from continuing operations
attributable to CNA common stockholders
    
    $
    0.82
    
    
    $
    0.96
    
    
    $
    (0.51
    )
    
    $
    1.09
    
    
    $
    2.36Income (loss) from discontinued operations
attributable to CNA common stockholders
    
    
    -
    
    
    
    -
    
    
    
    (0.08
    )
    
    
    -
    
    
    
    (0.08
    )Basic and diluted earnings (loss) per
share attributable to CNA common
stockholders
    
    $
    0.82
    
    
    $
    0.96
    
    
    $
    (0.59
    )
    
    $
    1.09
    
    
    $
    2.28Quarterly Financial Data
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FullFirst
    
    Second
    
    Third
    
    Fourth
    
    Year(In millions, except per share data)2009Revenues
    
    $
    1,638
    
    
    $
    2,096
    
    
    $
    2,340
    
    
    $
    2,398
    
    
    $
    8,472Income (loss) from continuing operations,
net of tax
    
    
    (185
    )
    
    
    120
    
    
    
    278
    
    
    
    270
    
    
    
    483Income (loss) from discontinued operations,
net of tax
    
    
    -
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    -
    
    
    
    (2
    )Net (income) loss attributable to
noncontrolling interests, net of tax
    
    
    (10
    )
    
    
    (14
    )
    
    
    (14
    )
    
    
    (24
    )
    
    
    (62
    )Net income (loss) attributable to CNA
    
    $
    (195
    )
    
    $
    105
    
    
    $
    263
    
    
    $
    246
    
    
    $
    419Basic and Diluted Earnings (Loss) Per ShareIncome (loss) from continuing operations
attributable to CNA common stockholders
    
    $
    (0.84
    )
    
    $
    0.28
    
    
    $
    0.86
    
    
    $
    0.81
    
    
    $
    1.11Income (loss) from discontinued operations
attributable to CNA common stockholders
    
    
    -
    
    
    
    (0.01
    )
    
    
    -
    
    
    
    -
    
    
    
    (0.01
    )Basic and diluted earnings (loss) per
share attributable to CNA common
stockholders
    
    $
    (0.84
    )
    
    $
    0.27
    
    
    $
    0.86
    
    
    $
    0.81
    
    
    $
    1.10
  133




---



##### Table of Contents



Note R. Related Party Transactions
     134




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework
    135




---



##### Table of Contents



Internal Control - Integrated Framework
  
 136




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     
 137




---



##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
    
 ITEM 9B. OTHER INFORMATION
  138




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  FIRSTBECAMEPOSITION AND
    
    
    
    
    
    EXECUTIVEOFFICES HELD WITH
    
    
    
    
    
    OFFICER OF
    
    PRINCIPAL OCCUPATION DURING PAST FIVENAME
    
    REGISTRANT
    
    AGE
    
    CNA
    
    YEARSThomas F. Motamed
    
    Chief Executive
Officer, CNA
Financial
Corporation
    
    62

    
    2009

    
    Chief Executive Officer of CNA
Financial Corporation since January
1, 2009. From December 2002 to June
2008, Vice Chairman and Chief
Operating Officer of The Chubb
Corporation and President and Chief
Operating Officer of Chubb &
Son.D. Craig Mense
    
    Executive Vice
President & Chief
Financial Officer,
CNA Financial
Corporation
    
    59

    
    2004

    
    Executive Vice President and Chief
Financial Officer of CNA Financial
Corporation.George R. Fay
    
    Executive Vice
President,
Worldwide Property
& Casualty Claim of
the CNA insurance
companies
    
    62

    
    2010

    
    Executive Vice President, Worldwide
Property & Casualty Claim of the CNA
insurance companies since July 2006.
From July 1974 to July 2006, held
various positions at The Chubb
Corporation including Chief Services
Officer.Larry A. Haefner
    
    Executive Vice
President & Chief
Actuary of the CNA
insurance companies
    
    54

    
    2008

    
    Executive Vice President & Chief
Actuary of the CNA insurance
companies since April 2008. From
October 2004 to April 2008, Vice
President & Chief Actuary, Middle
Market Business of The Travelers
Insurance Companies.Jonathan D. Kantor
    
    Executive Vice
President, General
Counsel and
Secretary, CNA
Financial
Corporation
    
    55

    
    1997

    
    Executive Vice President, General
Counsel and Secretary of CNA
Financial Corporation.Robert A. Lindemann
    
    President and Chief
Operating Officer,
CNA Commercial of
the CNA insurance
companies
    
    57

    
    2010

    
    President and Chief Operating
Officer, CNA Commercial of the CNA
insurance companies since August
2009. From September 2004 to August
2009, Chief Operating Officer,
Commercial Markets and President,
Middle Markets of Zurich Financial
Services North America.Thomas Pontarelli
    
    Executive Vice
President & Chief
Administration
Officer of the CNA
insurance companies
    
    61

    
    2009

    
    Executive Vice President & Chief
Administration Officer of the CNA
insurance companies.Timothy J. Szerlong
    
    President,
Worldwide Field
Operations of the
CNA insurance
companies
    
    58

    
    2010

    
    President, Worldwide Field
Operations of the CNA insurance
companies since September 2009.
From June 1974 to August 2009, held
various positions at The Chubb
Corporation including Senior Vice
President and Eastern U.S. Field
Operations Officer.Peter W. Wilson
    
    President and Chief
Operating Officer,
CNA Specialty of
the CNA insurance
companies
    
    51

    
    2009

    
    President and Chief Operating
Officer, CNA Specialty of the CNA
insurance companies since April
2009. From March 2002 to April 2009,
Executive Vice President, Global
Specialty Lines of the CNA insurance
companies.
  139




---



##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 Equity Compensation Plan
  Executive Compensation Information
 December 31, 2010
 Number of securitiesNumber of securities to
    
    
    
    
    
    remaining available forbe issued upon
    
    Weighted average exercise
    
    future issuance underexercise of outstanding
    
    price of outstanding
    
    equity compensation plansoptions, warrants and
    
    options, warrants and
    
    (excluding securitiesrights
    
    rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Plan CategoryEquity compensation
plans approved by
security holders
    
    
    2,234,357
    
    
    $
    25.76
    
    
    
    2,626,688Equity compensation
plans not approved
by security holders
    
    
    -
    
    
    
    -
    
    
    
    -Total
    
    
    2,234,357
    
    
    $
    25.76
    
    
    
    2,626,688
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  140




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 PageNumber(a)
    
    1
    
    FINANCIAL STATEMENTS:Consolidated Statements of Operations  Years Ended December 31, 2010, 2009, and 2008
    
    
    56Consolidated Statements of Comprehensive Income (Loss) 
Years Ended December 31, 2010, 2009 and 2008
    
    
    58Consolidated Balance Sheets  December 31, 2010 and 2009
    
    
    59Consolidated Statements of Cash Flows  Years Ended December 31, 2010, 2009 and 2008
    
    
    60Consolidated Statements of Stockholders Equity 
Years Ended December 31, 2010, 2009 and 2008
    
    
    62Notes to Consolidated Financial Statements
    
    
    63Report of Independent Registered Public Accounting Firm
    
    
    135(a)
    
    2
    
    FINANCIAL STATEMENT SCHEDULES:Schedule I
    
    Summary of Investments
    
    
    147Schedule II
    
    Condensed Financial Information of Registrant (Parent Company)
    
    
    148Schedule III
    
    Supplementary Insurance Information
    
    
    153Schedule IV
    
    Reinsurance
    
    
    153Schedule V
    
    Valuation and Qualifying Accounts
    
    
    153Schedule VI
    
    Supplemental Information Concerning Property and Casualty Insurance Operations
    
    
    154(a)
    
    3
    
    EXHIBITS:
 ExhibitDescription of Exhibit
    
    Number(3)
    
    
    Articles of incorporation and by-laws:Certificate of Incorporation of CNA Financial Corporation, as amended May
6, 1987 (Exhibit 3.1 to Form S-8 filed October 9, 1998 incorporated herein
by reference)
    
    3.1Certificate of Amendment of Certificate of Incorporation, dated May 14,
1998 (Exhibit 3.1a to 2006 Form 10-K incorporated herein by reference)
    
    3.1.1Certificate of Amendment of Certificate of Incorporation, dated May 10,
1999 (Exhibit 3.1 to 1999 Form 10-K incorporated herein by reference)
    
    3.1.2By-Laws of CNA Financial Corporation, as amended October 24, 2007
(Exhibit 3ii.1 to Form 8-K filed October 29, 2007 incorporated herein by
reference)
    
    3.2(4)
    
    
    Instruments defining the rights of security holders, including indentures:*Registration Rights Agreement, dated August 8, 2006, between CNA Financial
Corporation and Loews Corporation (Exhibit 10.1 to August 8, 2006 Form 8-K
incorporated herein by reference)
    
    4.1
 141




---



##### Table of Contents



(10)
    
    
    Material contracts:Credit Agreement among CNA Financial Corporation, J.P. Morgan
Securities Inc., Citibank N.A., Bank of America, N.A.,
JPMorgan Chase Bank N.A., Wachovia Bank, N.A. and other
lenders named therein, dated August 1, 2007 (Exhibit 99.1 to
August 1, 2007 Form 8-K incorporated herein by reference)
    
    10.1Federal Income Tax Allocation Agreement, dated February 29,
1980 between CNA Financial Corporation and Loews Corporation
(Exhibit 10.2 to 1987 Form 10-K incorporated herein by
reference)
    
    10.2Investment Facilities and Services Agreement, dated January 1,
2006, by and among Loews/CNA Holdings, Inc., CNA Financial
Corporation and the Participating Subsidiaries (Exhibit 10.3
to 2007 Form 10-K incorporated herein by reference)
    
    10.3Amendment to Investment Facilities and Services Agreement,
dated January 1, 2007, by and among Loews/CNA Holdings, Inc.
and CNA Financial Corporation (Exhibit 10.3.1 to 2007 Form
10-K incorporated herein by reference)
    
    10.3.1Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and American
Casualty Company of Reading, Pennsylvania (Exhibit 10.3.2 to
2007 Form 10-K incorporated herein by reference)
    
    10.3.2Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Columbia
Casualty Company (Exhibit 10.3.3 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.3Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Continental
Assurance Company (Exhibit 10.3.4 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.4Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Continental
Casualty Company (Exhibit 10.3.5 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.5Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and National Fire
Insurance Company of Hartford (Exhibit 10.3.6 to 2007 Form
10-K incorporated herein by reference)
    
    10.3.6Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and The Continental
Insurance Company (Exhibit 10.3.7 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.7Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and The Continental
Insurance Company of New Jersey (Exhibit 10.3.8 to 2007 Form
10-K incorporated herein by reference)
    
    10.3.8
 142




---



##### Table of Contents



Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Transportation
Insurance Company (Exhibit 10.3.9 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.9Acknowledgement to Investment Facilities and Services
Agreement, dated January 1, 2006, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Valley Forge
Insurance Company (Exhibit 10.3.10 to 2007 Form 10-K
incorporated herein by reference)
    
    10.3.10Acknowledgment to Investment Facilities and Services
Agreement, dated January 1, 2008, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and Continental
Reinsurance Corporation International Limited (Exhibit 10.5 to
March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.3.11Acknowledgment to Investment Facilities and Services
Agreement, dated January 1, 2008, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and North Rock
Insurance Company Limited (Exhibit 10.6 to March 31, 2008 Form
10-Q incorporated herein by reference)
    
    10.3.12Acknowledgment to Investment Facilities and Services
Agreement, dated January 1, 2008, by and among Loews/CNA
Holdings, Inc., CNA Financial Corporation, and CNA National
Warranty Corporation (Exhibit 10.7 to March 31, 2008 Form 10-Q
incorporated herein by reference)
    
    10.3.13Amended and Restated Surplus Note, dated as of December 11,
2008, from Continental Casualty Company to CNA Financial
Corporation (Exhibit 10.4 to 2008 Form 10-K incorporated
herein by reference)
    
    10.42008 Senior Preferred Stock Redemption Agreement, dated
November 10, 2009, by and between CNA Financial
Corporation and Loews Corporation (Exhibit 10.2 to Form 8-K
filed November 13, 2009 incorporated
herein by reference)
    
    10.52008 Senior Preferred Redemption Agreement, dated August 5,
2010, by and between CNA Financial Corporation and Loews
Corporation (Exhibit 10.1 to Form 8-K filed August 6, 2010
incorporated herein by reference)
    
    10.5.12008 Senior Preferred Redemption Agreement, dated December 1,
2010, by and between CNA Financial Corporation and Loews
Corporation (Exhibit 10.1 to Form 8-K filed December 2, 2010
incorporated herein by reference)
    
    10.5.2CNA Financial Corporation Incentive Compensation Plan, as
amended and restated, effective as of January 1, 2010 (Exhibit
A to Form DEF 14A, filed April 2, 2010, incorporated herein by
reference)
    
    10.6CNA Supplemental Executive Retirement Plan, restated as of
January 1, 2009 (Exhibit 10.7 to 2008 Form 10-K incorporated
herein by reference)
    
    10.7First Amendment to the CNA Supplemental Executive Retirement
Plan, dated December 23, 2009 (Exhibit 10.8.1 to 2009 Form
10-K incorporated herein by reference)
    
    10.7.1CNA Supplemental Executive Savings and Capital Accumulation
Plan, restated as of January 1, 2009 (Exhibit 10.8 to 2008
Form 10-K incorporated herein by reference)
    
    10.8
 143




---



##### Table of Contents



2009 Incentive Compensation Awards to Executive Officers
(Exhibit 10.9 to 2008 Form 10-K incorporated herein by
reference)
    
    10.9Award Letter and Award Terms to Thomas F. Motamed for Restricted Stock Units
    
    10.102008 Incentive Compensation Awards to Executive Officers
(Exhibit 10.9 to 2007 Form 10-K incorporated herein by
reference)
    
    10.11Form of Award Letter to Executive Officers, along with Form of
Award Terms, for the Long-Term Incentive Cash Plan for the
2008-2010 Long-Term Incentive Cash Plan Cycle (Exhibit 10.2 to
March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.11.1Form of Award Letter to Executive
Officers, along with Form of Award Terms,
relating to Stock Appreciation Rights
    
    10.11.22007 Incentive Compensation Awards to Executive Officers
(Exhibit 10.23 to March 31, 2007 Form 10-Q incorporated herein
by reference)
    
    10.12Employment Agreement, dated May 22, 2008, by and between CNA
Financial Corporation and Thomas F. Motamed (Exhibit 10.1 to
June 30, 2008 Form 10-Q incorporated herein by reference)
    
    10.13First Amendment to Employment Agreement, dated October 24,
2008, by and between CNA Financial Corporation and Thomas F.
Motamed (Exhibit 10.6 to September 30, 2008 Form 10-Q
incorporated herein by reference)
    
    10.13.1Employment Agreement, dated April 1, 2008, by and between
Continental Casualty Company and Jonathan D. Kantor (Exhibit
10.2 to September 30, 2008 Form 10-Q incorporated herein by
reference)
    
    10.14Letter Agreement, dated June 18, 2007, by and between
Continental Casualty Company and Thomas Pontarelli (Exhibit
10.17 to 2009 Form 10-K incorporated herein by reference)
    
    10.15Letter Agreement, dated August 8, 2008, by and between
Continental Casualty Company and Thomas Pontarelli (Exhibit
10.17.1 to 2009 Form 10-K incorporated herein by reference)
    
    10.15.1Letter Agreement, dated December 9, 2009, by and between
Continental Casualty Company and Thomas Pontarelli (Exhibit
10.17.2 to 2009 Form 10-K incorporated herein by reference)
    
    10.15.2Employment Agreement, dated August 24, 2006, by and between
Continental Casualty Company and Peter W. Wilson (Exhibit
10.18 to 2009 Form 10-K incorporated herein by reference)
    
    10.16Amendment to Employment Agreement, dated September 19, 2008,
by and between
Continental Casualty Company and Peter W. Wilson (Exhibit
10.18.1 to 2009 Form 10-K incorporated herein by reference)
    
    10.16.1Master Transaction Agreement, dated July 14, 2010, among
Continental Casualty Company, The Continental Insurance
Company, Continental Reinsurance Corporation International,
Ltd., CNA Insurance Company Limited, National Indemnity
Company and, solely for purposes of Sections 5.19 and 7.3(b)
thereof, Berkshire Hathaway Inc. (Exhibit 10.1 to Form 8-K
filed July 16, 2010 incorporated herein by reference)
    
    10.17
 144




---



##### Table of Contents



Administrative Services Agreement, dated August 31, 2010,
among Continental Casualty Company, The Continental Insurance
Company, Continental Reinsurance Corporation International,
Ltd., CNA Insurance Company Limited and National Indemnity
Company (Exhibit 10.1 to Form 8-K filed September 1, 2010
incorporated herein by reference)
    
    10.18Collateral Trust Agreement, dated August 31, 2010, among
Continental Casualty Company, The Continental Insurance
Company, Continental Reinsurance Corporation International,
Ltd., CNA Insurance Company Limited, National Indemnity
Company and Wells Fargo Bank, National Association (Exhibit
10.2 to Form 8-K filed September 1, 2010 incorporated herein
by reference)
    
    10.19Loss Portfolio Transfer Reinsurance Agreement, dated August
31, 2010, among Continental Casualty Company, The Continental
Insurance Company, Continental Reinsurance Corporation
International, Ltd., CNA Insurance Company Limited and
National Indemnity Company (Exhibit 10.3 to Form 8-K filed
September 1, 2010 incorporated herein by reference)
    
    10.20Amendment No. 1 to the Master Transaction Agreement, dated
August 31, 2010, among Continental Casualty Company, The
Continental Insurance Company, Continental Reinsurance
Corporation International, Ltd., CNA Insurance Company Limited
and National Indemnity Company (Exhibit 10.4 to Form 8-K filed
September 1, 2010 incorporated herein by reference)
    
    10.21Parental Guarantee Agreement, dated August 31, 2010, made by
Berkshire Hathaway Inc. in favor of Continental Casualty
Company, The Continental Insurance Company, Continental
Reinsurance Corporation International, Ltd. and CNA Insurance
Company Limited (Exhibit 10.5 to Form 8-K filed September 1,
2010 incorporated herein by reference)
    
    10.22Employment Agreement between Continental Casualty Company and
D. Craig Mense, dated August 1, 2007 (Exhibit 10.1 to
September 30, 2007 Form 10-Q incorporated herein by reference)
    
    10.23Amendment to Employment Agreement, dated July 1, 2008, by and
between Continental Casualty Company and D. Craig Mense
(Exhibit 10.4 to September 30, 2008 Form 10-Q incorporated
herein by reference)
    
    10.23.1Subsidiaries of the Registrant
    
    21.1Consent of Independent Registered Public Accounting Firm
    
    23.1Certification of Chief Executive Officer
    
    31.1Certification of Chief Financial Officer
    
    31.2Written Statement of the Chief Executive Officer of CNA
Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
    
    32.1Written Statement of the Chief Financial Officer of CNA
Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
    
    32.2
 145




---



##### Table of Contents



*CNA Financial Corporation hereby agrees to furnish to the
Commission upon request copies of instruments with respect to
long term debt, pursuant to Item 601(b)(4) (iii) of Regulation
S-K.(b)
    
    
    
    
    Exhibits:None.(c)
    
    
    
    
    Condensed Financial Information of Unconsolidated Subsidiaries:None.
  146




---



##### Table of Contents



SCHEDULE I. SUMMARY OF INVESTMENTS  OTHER THAN INVESTMENTS IN RELATED PARTIES
  147




---



##### Table of Contents



SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
 CNA Financial Corporation  Statements of Operations
 Years ended December 31
    
    2010
    
    
    2009
    
    
    2008(In millions)RevenuesNet investment income
    
    $
    4
    
    
    $
    3
    
    
    $
    16Net realized investment gains (losses)
    
    
    (1
    )
    
    
    8
    
    
    
    (19
    )Other income
    
    
    96
    
    
    
    101
    
    
    
    15Total revenues
    
    
    99
    
    
    
    112
    
    
    
    12ExpensesAdministrative and general
    
    
    5
    
    
    
    2
    
    
    
    9Interest
    
    
    148
    
    
    
    116
    
    
    
    123Total expenses
    
    
    153
    
    
    
    118
    
    
    
    132Loss from operations before income taxes and equity in
net income (loss) of subsidiaries
    
    
    (54
    )
    
    
    (6
    )
    
    
    (120
    )Income tax benefit
    
    
    19
    
    
    
    2
    
    
    
    42Loss before equity in net income (loss) of subsidiaries
    
    
    (35
    )
    
    
    (4
    )
    
    
    (78
    )Equity in net income (loss) of subsidiaries
    
    
    725
    
    
    
    423
    
    
    
    (221
    )Net income (loss)
    
    $
    690
    
    
    $
    419
    
    
    $
    (299
    )
  148




---



##### Table of Contents



CNA Financial Corporation
Balance Sheets
 December 31
    
    2010
    
    
    2009(In millions, except share data)AssetsInvestment in subsidiaries
    
    $
    12,780
    
    
    $
    11,433Fixed maturity securities available-for-sale, at fair value (amortized
cost of $3 and $4)
    
    
    3
    
    
    
    4Equity securities available-for-sale, at fair value (cost of $0 and $1)
    
    
    -
    
    
    
    1Short term investments
    
    
    215
    
    
    
    395Amounts due from affiliates
    
    
    11
    
    
    
    10Surplus note due from affiliate
    
    
    500
    
    
    
    1,000Other assets
    
    
    16
    
    
    
    33Total assets
    
    $
    13,525
    
    
    $
    12,876Liabilities and equityLiabilities:Short term debt
    
    $
    399
    
    
    $
    -Long term debt
    
    
    2,131
    
    
    
    2,183Other liabilities
    
    
    41
    
    
    
    33Total liabilities
    
    
    2,571
    
    
    
    2,216Equity:Preferred stock (12,500,000 shares authorized)

2008 Senior Preferred (no par value; $100,000 stated value; no
shares and 10,000
shares issued and outstanding held by Loews Corporation)
    
    
    -
    
    
    
    1,000Common stock ($2.50 par value; 500,000,000 shares authorized;
273,040,243 shares
issued; 269,139,198 and 269,026,759 shares outstanding)
    
    
    683
    
    
    
    683Additional paid-in capital
    
    
    2,200
    
    
    
    2,177Retained earnings
    
    
    7,876
    
    
    
    7,264Accumulated other comprehensive income (loss)
    
    
    326
    
    
    
    (325
    )Treasury stock (3,901,045 and 4,013,484 shares), at cost
    
    
    (105
    )
    
    
    (109
    )Notes receivable for the issuance of common stock
    
    
    (26
    )
    
    
    (30
    )Total equity
    
    
    10,954
    
    
    
    10,660Total liabilities and equity
    
    $
    13,525
    
    
    $
    12,876
  149




---



##### Table of Contents



CNA Financial Corporation
Statements of Cash Flows
 Years ended December 31
    
    2010
    
    
    2009
    
    
    2008(In millions)Cash Flows from Operating Activities:Net income (loss)
    
    $
    690
    
    
    $
    419
    
    
    $
    (299
    )Adjustments to reconcile net income (loss) to net
cash flows provided (used) by operating
activities:Equity in net (income) loss of subsidiaries
    
    
    (725
    )
    
    
    (423
    )
    
    
    221Dividends received from subsidiaries
    
    
    1
    
    
    
    -
    
    
    
    697Net realized investment (gains) losses
    
    
    1
    
    
    
    (8
    )
    
    
    19Other, net
    
    
    85
    
    
    
    (21
    )
    
    
    81Total adjustments
    
    
    (638
    )
    
    
    (452
    )
    
    
    1,018Net cash flows provided (used) by operating activities
    
    
    52
    
    
    
    (33
    )
    
    
    719Cash Flows from Investing Activities:Proceeds from fixed maturity securities
    
    $
    (2
    )
    
    $
    12
    
    
    $
    1Change in short term investments
    
    
    181
    
    
    
    145
    
    
    
    (666
    )Capital contributions to subsidiaries
    
    
    (6
    )
    
    
    (3
    )
    
    
    (2
    )Purchase of surplus note from affiliate
    
    
    -
    
    
    
    -
    
    
    
    (1,000
    )Repayment of surplus note by affiliate
    
    
    500
    
    
    
    -
    
    
    
    -Other, net
    
    
    -
    
    
    
    (12
    )
    
    
    (3
    )Net cash flows provided (used) by investing activities
    
    $
    673
    
    
    $
    142
    
    
    $
    (1,670
    )Cash Flows from Financing Activities:Dividends paid to Loews for 2008 Senior Preferred
    
    $
    (76
    )
    
    $
    (122
    )
    
    $
    (19
    )Dividends paid to common stockholders
    
    
    -
    
    
    
    -
    
    
    
    (122
    )Proceeds from the issuance of debt
    
    
    495
    
    
    
    350
    
    
    
    250Principal payments on debt
    
    
    (150
    )
    
    
    (100
    )
    
    
    (350
    )Payment to redeem 2008 Senior Preferred
    
    
    (1,000
    )
    
    
    (250
    )
    
    
    -Proceeds from the issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    -
    
    
    
    1,250Stock options exercised
    
    
    3
    
    
    
    1
    
    
    
    1Purchase of treasury stock
    
    
    -
    
    
    
    -
    
    
    
    (70
    )Other, net
    
    
    3
    
    
    
    12
    
    
    
    11Net cash flows provided (used) by financing activities
    
    $
    (725
    )
    
    $
    (109
    )
    
    $
    951Net change in cash
    
    $
    -
    
    
    $
    -
    
    
    $
    -Cash, beginning of year
    
    
    -
    
    
    
    -
    
    
    
    -Cash, end of year
    
    $
    -
    
    
    $
    -
    
    
    $
    -
  150




---



##### Table of Contents



Notes to Condensed Financial Information
 A. Basis of Presentation
  B. Debt
  Debt
 December 31
    
    2010
    
    2009(In millions)Short-term debt:Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    $
    399
    
    
    $
    -Long-term debt:Variable rate debt:Credit Facility  variable rate and term, due August 1, 2012
    
    
    -
    
    
    
    150Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    
    -
    
    
    
    3995.850%, face amount of $549, due December 15, 2014
    
    
    548
    
    
    
    5476.500%, face amount of $350, due August 15, 2016
    
    
    347
    
    
    
    3476.950%, face amount of $150, due January 15, 2018
    
    
    149
    
    
    
    1497.350%, face amount of $350, due November 15, 2019
    
    
    348
    
    
    
    3475.875%, face amount of $500, due August 15, 2020
    
    
    495
    
    
    
    -Debenture, 7.250%, face amount of $243, due November 15, 2023
    
    
    241
    
    
    
    241Urban Development Action Grant, 1.00%, due May 7, 2019
    
    
    3
    
    
    
    3Total long-term debt
    
    
    2,131
    
    
    
    2,183Total debt
    
    $
    2,530
    
    
    $
    2,183
     C. Commitments, Contingencies and Guarantees
  151




---



##### Table of Contents



152




---



##### Table of Contents



SCHEDULE III. SUPPLEMENTARY INSURANCE INFORMATION
  
 SCHEDULE IV. REINSURANCE
  
 SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    Charged to
    
    Charged toBeginning
    
    Costs and
    
    Other
    
    
    
    
    
    Balance atof Period
    
    Expenses
    
    Accounts (a)
    
    Deductions
    
    End of Period(In millions)Year ended December 31, 2010Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance receivables
    
    $
    553
    
    
    $
    (232
    )
    
    $
    (1
    )
    
    $
    (35
    )
    
    $
    285Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Year ended December 31, 2009Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance receivables
    
    $
    587
    
    
    $
    4
    
    
    $
    (1
    )
    
    $
    (37
    )
    
    $
    553Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Year ended December 31, 2008Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance receivables
    
    $
    773
    
    
    $
    (37
    )
    
    $
    (4
    )
    
    $
    (145
    )
    
    $
    587Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
  153




---



##### Table of Contents



SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING PROPERTY AND CASUALTY INSURANCE OPERATIONS
 Consolidated Property and Casualty OperationsAs of and for the years ended December 31
    
    2010
    
    2009
    
    2008(In millions)Deferred acquisition costs
    
    $
    1,079
    
    
    $
    1,108Reserves for unpaid claim and claim adjustment expenses
    
    
    25,412
    
    
    
    26,712Discount deducted from claim and claim adjustment expense reserves
above (based on interest rates ranging from 3.0% to 7.5%)
    
    
    1,552
    
    
    
    1,595Unearned premiums
    
    
    3,203
    
    
    
    3,274Net written premiums
    
    
    6,471
    
    
    
    6,713
    
    
    
    7,090Net earned premiums
    
    
    6,514
    
    
    
    6,720
    
    
    
    7,149Net investment income
    
    
    2,097
    
    
    
    2,110
    
    
    
    1,547Incurred claim and claim adjustment expenses related to current year
    
    
    4,737
    
    
    
    4,788
    
    
    
    5,189Incurred claim and claim adjustment expenses related to prior years
    
    
    (545
    )
    
    
    (241
    )
    
    
    (7
    )Amortization of deferred acquisition costs
    
    
    1,387
    
    
    
    1,417
    
    
    
    1,467Paid claim and claim adjustment expenses
    
    
    4,667
    
    
    
    4,841
    
    
    
    5,327
 154




---



##### Table of Contents



SIGNATURES
  CNA Financial CorporationDated: February 22, 2011
    
    By
    
    /s/ Thomas F. MotamedThomas F. MotamedChief Executive Officer(Principal Executive Officer)By
    
    /s/ D. Craig MenseD. Craig MenseExecutive Vice President andChief Financial Officer(Principal Financial & Accounting Officer)
  Dated: February 22, 2011
    
    By
    
    /s/ Thomas F. Motamed(Thomas F. Motamed, Chief Executive Officerand Chairman of the Board of Directors)Dated: February 22, 2011
    
    By
    
    /s/ Paul J. Liska(Paul J. Liska, Director)Dated: February 22, 2011
    
    By
    
    /s/ Jose O. Montemayor(Jose O. Montemayor, Director)Dated: February 22, 2011
    
    By
    
    /s/ Don M. Randel(Don M. Randel, Director)Dated: February 22, 2011
    
    By
    
    /s/ Joseph Rosenberg(Joseph Rosenberg, Director)Dated: February 22, 2011
    
    By
    
    /s/ Andrew H. Tisch(Andrew H. Tisch, Director)Dated: February 22, 2011
    
    By
    
    /s/ James S. Tisch(James S. Tisch, Director)Dated: February 22, 2011
    
    By
    
    /s/ Marvin Zonis(Marvin Zonis, Director)
 155